What are the reasons for unequal distribution of income? List at least six reasons.
What will be an ideal response?
The text lists the following eight reasons:1. There may be differences in ability. Intellectual and entrepreneurial abilities may differ.2. There may be differences in intensity of work. Some persons prefer to work; others prefer more leisure. This accounts for voluntary differences in income.3. Some persons take risks and win; others take risks and lose; and some take no risks at all, ending up in the middle. This may also be a source of voluntary differences in income.4. There are compensating differentials for jobs that are perceived as dangerous or otherwise unpleasant. The differential is necessary to draw in labor and make up for the unattractive features of the job.5. There are differences in schooling and training. To the extent that human capital theory is descriptively accurate, the differences will result in differences in income.6. Work experience varies, and older workers tend to earn higher incomes than younger workers.7. There are differences in inherited wealth-financial and human capital-that can lead to differences in income.8. Finally, luck plays a role. Examples include prospectors who strike oil and farmers who are plagued by drought.
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A) buying stock options. B) selling puts on financial futures. C) using a foreign exchange swap. D) buying swaptions.
Oil is considered:
A. a renewable resource. B. a nonrenewable resource. C. physical capital. D. technology.
Which of the following explains why soccer players make millions of dollars in Europe but do not in the United States?
a. discriminatory rules established by the government b. compensating wage differentials for living in Europe c. discriminatory preferences on the part of US sports fans for other sports d. efficiency wages paid to European players to enhance on-field performance
The shape of the _____ curve determines the impact of an aggregate demand shift on prices and output.
A. Marginal revenue B. Total cost C. Production possibilities D. Aggregate supply