How do you explain why income inequality in the United States has been increasing?
a. New technologies raise the MRP of educated workers, while having no (or a much smaller effect) on the MRP of uneducated workers
b. The MRP of rich workers increases more slowly than the MRP of poor workers.
c. The labor supply of poor workers shifts to the left, while the labor supply of rich workers shifts to the right.
d. Many talented U.S. workers, earning high incomes, are lured away by firms located in other countries that are paying considerably higher wage rates.
e. Minimum wage laws have raised the minimum wage rates.
A
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Figure 1-2
Identify the slope of the two curves A and B in Figure 1-2.
A. A—zero, B—one. B. A—one, B—zero. C. A—one, B—different at different points. D. A—different at different points, B—zero.
When price and marginal cost are equal for a perfectly competitive firm, the firm is
A) minimizing average total cost. B) maximizing total revenue. C) maximizing economic profit. D) earning negative economic profit.
When the reservation wage is adjusted to account for a higher inflation rate:
a. the aggregate demand curve shifts to the right. b. the price level falls. c. the short-run Phillips curve shifts outward. d. production costs of businesses decline. e. the aggregate supply curve shifts to the right.
Moral hazard is more likely to arise when:
A. one side of an economic relationship cannot observe the behavior of those on the other side. B. adverse selection is present. C. insurance policies have high deductibles. D. people are uninsured.