What is meant by the term "assortative mating" and how does it affect the distribution of wealth?
What will be an ideal response?
Assortative mating is the tendency for people to marry within their own socioeconomic class. Wealthy people tend to marry other wealthy people; wealth remains concentrated and this fact contributes to the skewed distribution of wealth.
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Moral hazard can be avoided by:
A. employers monitoring employee effort. B. removing the asymmetric information. C. employers incentivizing employees to maintain consistent effort. D. All of these statements are true.
Suppose the U.S. can produce 10 units of food and 5 units of clothing (or any such linear combination) and Canada can produce 6 units of food and 4 units of clothing (or any such linear combination). If trade occurs between these two countries, which should produce more food and which more clothing?
What will be an ideal response?
In the first years of a professional athlete's career, the athlete is "under reserve," which means that he or she cannot negotiate with other teams. After a specified amount of time, the player can become a free agent. This implies that, everything else equal,
A) the player's salary is probably higher as a free agent than as a reserve player. B) the player's salary is probably lower as a free agent than as a reserve player. C) the player's salary is probably the same as a free agent and as a reserve player. D) the free agent status is not granted to every player.
Normative economics is an approach to economics that
A. applies statistical techniques and data to economic problems. B. analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe preferred courses of action. C. examines the role of government in the economy. D. seeks to understand behavior and the operation of systems without making judgments.