Which of the following is true concerning the distribution of income?
a. Various measures of income inequality can be used to objectively determine the fairness of an income distribution.
b. When the political process is democratic, income transfer programs will redistribute income from the rich to the poor.
c. The fairness of an income distribution is a normative concept; it cannot be determined objectively by economic criteria.
d. Income inequality is the fairest method to allocate income.
C
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Answer the following statements true (T) or false (F)
1. The rule of reason states that monopolies that behave well are still illegal. 2. Advertising is considered a form of product differentiation. 3. Oligopolies always produce differentiated products. 4. Price stability is common in oligopolies. 5. Perfect competition always provides a lower price than monopolistic competition or an oligopoly. 6. The Clayton Act prohibits price discrimination, if it substantially reduces competition. 7. A four-firm concentration ratio indicates the number of firms in the industry. 8. The Herfindahl Index is calculated by summing the squares of the market shares of each firm in the industry.
A reliable system of property rights and enforceable contracts are prerequisites for creating incentives that support a healthy market economy
a. True b. False
Oligopolists may well be able to reach their preferred, cooperative outcome if
a. the number of oligopolists is large. b. they learn that a Nash equilibrium is in their best long-term interests. c. a sufficient number of firms can be persuaded to lower their prices. d. the game they play is repeated a sufficient number of times.
According to _______________, if you suddenly inherited a large sum of money, you would spend only a small part of your inheritance right away.
A. the paradox of thrift B. the permanent income hypothesis C. Thorstein Veblen's Theory of the Leisure Class D. the theory of the multiplier