What role does human capital play in accounting for income inequality?
What will be an ideal response?
In general acquiring human capital is a costly endeavor so the supply of workers with a lot of human capital is less than the supply of workers with little human capital. The difference in supply means that the more human capital an individual attains, the more income that individual will likely earn, other things remaining the same. Greater variation in human capital across the population of households increases the degree of income inequality among households. While the level of human capital attained varies across households, this factor alone does not completely explain the observed variation in income across households in the United States
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Answer the following statements true (T) or false (F)
1. The ability to produce a good or service at a lower opportunity cost than other producers face is known as comparative advantage. 2. The ability of a nation to gain from specialization and exchange is affected by factors such as shipping costs and exchange rates. 3. One cause for the uneven standard of living throughout the world is the uneven distribution of resources. 4. The application of the principle of comparative advantage requires each of two trading partners to have an absolute advantage over the other in the production of some particular commodity.
What is the main problem regulators face when setting a price for a natural monopoly?
a. It is difficult to determine the quantity and price that the monopolist wants to produce. b. It is difficult to determine what the monopolist’s marginal cost is. c. It is difficult to determine the quantity consumers want to buy at the monopolist’s price. d. It is difficult to determine the price that doesn’t bankrupt the firm but doesn’t overcharge consumers.
An increase in the price of steel will result in
A. a decrease in the prices of automobiles. B. an increase in the cost of labor to produce automobiles. C. an increase in the equilibrium quantity of automobiles. D. a decrease in the supply of automobiles.
Purchases of existing commodities, such as gold and precious gems, are considered investment spending by economists.
a. true b. false