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Home / Questions / Suppose Fred’s marginal utility of an extra dollar of income is 56

Suppose Fred’s marginal utility of an extra dollar of income is 56

 Suppose Fred’s marginal utility of an extra dollar of income is 56, and Sally’s is 34. If a
                            dollar is taken from

a.Sally and given to Fred, the economy’s total utility will rise by 22 units

b.Fred and given to Sally, the economy’s total utility will rise by 22 units

c.Sally and given to Fred, the economy’s total utility will rise by 34 units

d.Sally and given to Fred, the economy’s total utility will rise by 56 units

e.Fred and given to Sally, the economy’s total utility will rise by 34 units

42.              The poor in the United States are disproportionately people who

a.have less than a high school education

b.have incomes that are essentially nonwage incomes

c.are poor white women

d.are families with over 5 children

e.live in cities

43.              A Lorenz curve based on the percentage of wealth held by different quintiles of the
                            population, when compared to one based on income shares, shows a

a.lower degree of inequality

b.higher degree of inequality

c.similar degree of inequality

d.higher absolute level of poverty

e.lower absolute level of poverty

44.              Consider two countries, A and B. Country A has a more egalitarian distribution of
                            incomes if

a.it has a lower Gini coefficient than B

b.the Lorenz curve for B lies above the one for A

c.the percentage of the population below the poverty line is higher in B

d.its Lorenz curve intersects from above B’s Lorenz curve

e.its Lorenz curve intersects from below B’s Lorenz curve

45.              The U.S. Gini coefficient shows that income inequality

a.increased steadily over the last four decades

b.remained fairly constant in the 1970s, and then increased steadily through the 1980s
and 1990s

c.increased gradually over the period 1947–1968, and then declined steadily through
the 1990s

d.has changed little over the last four decades

e.has declined in relation to other developed economies

46.              A case for equality of income distribution can be based on

a.the randomness of personal misfortune

b.the linkage between effort and reward

c.the ethic “from each according to his or her ability to each according to his or her
ability”

d.allowing the market to dictate outcomes

e.maximization of opportunity

47.              Philosopher John Rawls’s theory of justice presents an argument in favor of income
                            equality that relies on the

a.belief that, objectively, people would rather trade the uncertainties of fortune for the
certainty of moderate income

b.belief that human beings are perfectible, and it is the unequal distribution of property
that creates unequal distribution of incomes

c.argument that in a world of identical individuals, equality of incomes achieves the
greatest welfare number of people

d.argument that income equality breeds the most efficient use of economy’s resources

e.idea that private property originates from theft

48.              Which of the following statements is true about the Marxist’s argument in favor of an
                            egalitarian income distribution?

a.Aside from the very rich, people are disposed toward income equality.

b.Private property originates from theft and it is this property that creates unequal
distribution of income.

c.Government (welfare) and private charity doesn’t work.

d.Human beings are imperfect, and it is the unequal distribution of income that reflects
this imperfection.

e.Although income equality does not support the most efficient use of economy’s
resources, it’s worth it anyway.

49.              Economist A. P. Lerner’s idea that equality of income maximizes society’s welfare is
                            based on the assumption that

a.individuals have dissimilar utilities, but private property ownership distorts
individual utilities so that no income distribution exists that reflects true utilities

b.individuals are egalitarian

c.individuals have identical utility functions

d.individuals have identical skills

e.individuals would voluntarily choose income equality

50.              According to many economists who emphasize the connection between productive
                            contribution and economic reward, income inequality

a.can actually make the poor better off in the long run

b.has nothing to do with property rights

c.promotes efficiency in the use of resources

d.is consistent with long-run economic growth

e.has a negative effect on savings and investment incentives

 

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