According to Lerner, if we do not know people's utility functions, we
a. cannot engage in redistributing incomes among people
b. can still assume that the marginal utility of a dollar for the rich is higher than for the poor
c. make less of a mistake by assuming that they are equal
d. should let the market determine the distribution of income
e. should assume they are unequal because it is the most likely
C
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Suppose Dean and Kennedy are playing a single stage game. Each simultaneously chooses either 1 or 2. If they both select 1, Dean pays Kennedy $2. If they both pick 2, Dean pays Kennedy $4. If they select different numbers, Kennedy pays Dean $3. Draw a table showing the two players' strategies and payoffs. Are any strategies dominant? Weakly dominant? Dominated? Solve for a mixed strategy equilibrium.
The payoff matrix should appear as follows:
What will be an ideal response?
The Herfindahl index for a pure monopolist is:
A. 100. B. 10,000. C. 100,000. D. 10.
Answer the following statements true (T) or false (F)
1. In the U.S. in 2010, the top 1% of households held 35% of total wealth - leaving 65% of wealth to the remaining 99% of households. 2. Differences in skills or ability are one major reason for income differences in the United States. 3. The unequal distribution of wealth among households in the United States is one of the causes of income inequality. 4. During the past thirty-five years or so, the degree of income inequality in the United States has decreased considerably. 5. If income inequality is increasing, it means that the income levels of the poor are falling while the income levels of the rich are rising.
A Big Mac costs $4.00 in the United States and 9.00 reals in Brazil. If the exchange rate is 2 reals per dollar, purchasing power parity predicts that
A) the dollar will depreciate as the supply of dollars rises in the long run. B) the dollar will appreciate in the long run as the demand for the dollars rises. C) the dollar will appreciate as the demand for dollars falls in the long run. D) the dollar will depreciate as the demand for dollars falls in the long run.