A group of 10 people have the following annual incomes: $55,000, $30,000, $15,000, $20,000, $35,000, $80,000, $40,000, $45,000, $30,000, $50,000. Complete the table. IncomeQuintileShare of Income$15,000Bottom $20,000$30,0002nd $30,000$35,0003rd $40,000$45,0004th $50,000$55,000Top $80,000$4000 is taxed from the top earner and transferred to the lowest earnerWould this transfer increase, decrease, or have no effect on income inequality in this group?Redistributing income from the highest earner to the lowest one would reduce the utility of the top earner and increase the utility of the lowest earner. But what would happen to overall utility in the economy? Would it increase, decrease, or remain the same? Explain your answer. (Hint: does the marginal utility of income diminish as one earns more?)

Based on a nation's total income levels, the definition of poverty might vary; often, it is…

Answered: A group of 10 people have the following…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

100%

A group of 10 people have the following annual incomes: $55,000, $30,000, $15,000, $20,000, $35,000, $80,000, $40,000, $45,000, $30,000, $50,000. Complete the table.

Income	Quintile	Share of Income
$15,000	Bottom
$20,000
$30,000	2^nd
$30,000
$35,000	3^rd
$40,000
$45,000	4^th
$50,000
$55,000	Top
$80,000

$4000 is taxed from the top earner and transferred to the lowest earner

Would this transfer increase, decrease, or have no effect on income inequality in this group?
Redistributing income from the highest earner to the lowest one would reduce the utility of the top earner and increase the utility of the lowest earner. But what would happen to overall utility in the economy? Would it increase, decrease, or remain the same? Explain your answer. (Hint: does the marginal utility of income diminish as one earns more?)

Expert Solution