Consider the income redistribution example studied in class, i.e., Ui(ci) = 2(ci)^(1/2)with ci = Yi - ti. For simplicity assume that Y1 = 99 and Y2 = 1. More important assume that when a dollar is transferred from individual 1 to individual 2, a fraction L of it, where 0=0. Calculate the socially optimal level of income transfer, if any, from individual 1 to individual 2 that would maximize (i) SWU, SWR, and SWM/N.

Consider the income redistribution example studied in class, i.e., Ui(ci) = 2(ci)^(1/2)with ci = Yi - ti. For simplicity assume that Y1 = 99 and Y2 = 1. More important assume that when a dollar is transferred from individual 1 to individual 2, a fraction L of it, where 0=0. Calculate the socially optimal level of income transfer, if any, from individual 1 to individual 2 that would maximize (i) SWU, SWR, and SWM/N.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter17: Income, Poverty, And Health Care

Section: Chapter Questions

Problem 4P

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The government announces programs designed to reduce the share of income going to the top quintile from 60% to 20%. You predict that the most likely result is that: O mean household income will fall, because the highest income earners will earn less and work less. median household income will rise, because some of the 40% of redistributed income will be transferred to the third quintile. after redistribution, each quintile will receive 20% of total wealth. O the lowest quintile will receive the 40% taken from the top quintile and switch places.
If the area between the diagonal line of absolute equality and the Lorenz curve is greater for China than for the United States, we can conclude that the Distribution of income in China is less equal than in the United States. Relative distributions of income in the two countries are the same. O Distribution of income in China is as equal as in the United States. O Distribution of income in China is closer to being equal than in the United States.
Officials in fluxemburg are concerned about the current level of income inequality in their country, where the highest quintile of families currently earns 60% of the country's income. The central government has income information on its citizenry, and they want you to help them interpret the data from a 15-year period. The following table gives data on how families have moved between income quintiles between the years shown. ral in the missing values in the distribution table for familles in Fluxemburg; then use the information in the table to answer the following questions. Income Distribution in 2007 (Percent) Third Quintile Fourth Quintile Lowest Quintile Income Distribution in 1992 Highest Quintile Second Quintile Highest Quintile Second Quintile Third Quintile Fourth Quintile Lowest Quintile 65 12 13 51 18 8 12 -0* 52 Looking at families in the lowest quintile of income in 1992 (bottom row), you can report that higher quintile of income distribution by 2007. 6 10 16 57 11 5 14 66…
Suppose now that instead of herders buying the UThere phones, herders in the region were randomly given either a new UThere phone or soap of equivalent value. The impact evaluation team then randomly surveyed 250 herders who receive the phone and 250 who received the soap. When you directly compare average income for these two groups, the difference gives you: Naïve ATE due to selection bias, since those who randomly got phones are different from those who got soap. True ATE due to the randomization which implies that those who got soap are otherwise comparable to those who got phones. different way of measuring selection bias due to the randomization, since getting soap might increase the average income but not as much as UThere phones. the same value of Naïve ATE that you might expect to get without a random distribution of phones and soap.
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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. Calculate the share of total income each quintile of this income distribution received. Do the top and bottom quintiles in this distribution have a greater or larger share of total income than the top and bottom quintiles of the U.S. income distribution for 2005?
The tax policy is expected to narrow the gap in the income gapPublic. Economic justice is generally reflected in the distribution of existing incomePublic. The ideal of justice is graphically seen in the depiction of the leading Lorenz curveat / near the absolute even distribution line. Based on the principle of morality and especially onthe principle of rationality of good and evil in a more equitable or unequal distribution of incomecan be found.From the above statement, make clear by you the pros and cons of that income distributionmore evenly! Please describe!
100% Cumulative percentage of income 90% -Jарan 80% --- Portugal 70% 60% 50% 40% 30% 20% 10% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative percentage of households Figure 5 Lorenz curves for Japan and Portugal Examine the Lorenz Curves for Japan and Portugal shown in Figure 5. Which of the following statements are correct? Select one or more answers. Select one or more: O The top quintile (top 20%) of households in Portugal have a higher share of total income than the top quintile (top 20%) of households in Japan. The bottom decile (bottom 10%) of households in Japan have a lower share of total income than the bottom decile (bottom 10%) of households in Portugal. Portugal will have a lower Gini coefficient than Japan. Japan has a lower level of income inequality than Portugal.
Suppose the members of population A, consisting of Al, Bob, Curt, Doris, and Ellie, receive annual incomes of $5,000, $2,500, $1,250, $750, and $500, respectively. What percentage of total income is received by the highest 60 percent of the income receivers in population A? Multiple Choice O O O O 87.5 25 60 76.5 < Prev 5 of 10 www www www Ne
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