How do preferences and risk contribute to income inequality?
What will be an ideal response?
Some people prefer to work hard on the job and others do not, with the harder working usually earning more income. Some people prefer to work more hours and take less leisure time, and thus they earn a higher income. Individuals also have a different propensity for risk-taking in the type of work they do. Some are willing to take riskier jobs, such as steel workers on high-rise construction sites, and these types of jobs generally pay more than jobs with less risk.
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If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then total surplus will be
A) $0. B) $4 million. C) $8 million. D) $16 million.
Refer to Figure 4-13 which shows the market for watermelons. Suppose the government imposes a price floor of Pw. How will the price floor affect the quantity supplied, quantity demanded, and quantity exchanged?
What will be an ideal response?
Automatic stabilizers drive changes in
a. the total deficit. b. the cyclical deficit. c. the structural deficit. d. monetary policy. e. both b and c.
An indirect effect of an increase in the price level works through
A. changes in trade balances as domestic goods become more expensive, causing interest rates to move in the opposite direction from the change in the exchange rate. B. people substituting out of domestic goods and into foreign goods as exchange rates rise. C. interest rates as people borrow to maintain their money balances, bidding up interest rates and reducing total planned real expenditures. D. interest rates as people save more as the higher prices make their money balances less attractive.