Describe how each of these changes is likely to affect poverty and inequality: Incomes rise for low-income and high-income workers, but rise more for the high-income earners. Incomes fall for low-income and high-income workers, but fall more for high-income earners.

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Answer 1

Textbook Question

Chapter 15, Problem 1SCQ

Describe how each of these changes is likely to affect poverty and inequality:

Incomes rise for low-income and high-income workers, but rise more for the high-income earners.
Incomes fall for low-income and high-income workers, but fall more for high-income earners.

Expert Solution

To determine

(a)

To analyze:

The effect on poverty and inequality when the income rise for high-income and low-income workers but raise more for high-income earners.

Explanation of Solution

Income is influenced by demandand supply in labor markets, which can lead to very high income for some people and very low incomes for others. Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income rise for both high-income and low-income workers but rise more for high-income earners then poverty will fall and inequality will rise, as people with high income will continue to earn more, thereby creating inequality in the economy. The level of people falling under the poverty line will increase.

In short, rich people will become richer and poor will become poorer.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality: Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Expert Solution

To determine

(b)

To analyze:

Effect on poverty and inequality if incomes fall for high-income and low-income workers but fall more for high-income earners.

Explanation of Solution

Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income falls for low-income and high-income workers, it will result in rise in poverty and fall in inequality.The income gap between different groups of people will reduce and so will inequality.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality : Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

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Exercise 6 Imagine that you head production of a multinational food processing company. The ongoing uncer- tainty about costs means that you are unsure of the future cost of one of your inputs, x2. Your firm's production function is y = f(x1, x2) = x²x²² The output price p is 1000, x1 = 27, and wx₁ = 60. 1. Suppose the current input price is Wx2 = 50. Solve for the optimal choice of x2. 2. Now suppose that the probability the input price remains 50 is 0.65 and the probability that Wx2 60 is 0.35. Solve for the optimal choice of x2. Round down to the nearest integer. = 3. Finally, suppose the costs do actually rise, i.e., Wx2 = 60. Calculate the difference in profit from the uncertainty in (2) vs. the certainty in (1).

Answer 2

Textbook Question

Chapter 15, Problem 1SCQ

Describe how each of these changes is likely to affect poverty and inequality:

Incomes rise for low-income and high-income workers, but rise more for the high-income earners.
Incomes fall for low-income and high-income workers, but fall more for high-income earners.

Expert Solution

To determine

(a)

To analyze:

The effect on poverty and inequality when the income rise for high-income and low-income workers but raise more for high-income earners.

Explanation of Solution

Income is influenced by demandand supply in labor markets, which can lead to very high income for some people and very low incomes for others. Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income rise for both high-income and low-income workers but rise more for high-income earners then poverty will fall and inequality will rise, as people with high income will continue to earn more, thereby creating inequality in the economy. The level of people falling under the poverty line will increase.

In short, rich people will become richer and poor will become poorer.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality: Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Expert Solution

To determine

(b)

To analyze:

Effect on poverty and inequality if incomes fall for high-income and low-income workers but fall more for high-income earners.

Explanation of Solution

Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income falls for low-income and high-income workers, it will result in rise in poverty and fall in inequality.The income gap between different groups of people will reduce and so will inequality.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality : Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

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Answer 3

Textbook Question

Chapter 15, Problem 1SCQ

Describe how each of these changes is likely to affect poverty and inequality:

Incomes rise for low-income and high-income workers, but rise more for the high-income earners.
Incomes fall for low-income and high-income workers, but fall more for high-income earners.

Expert Solution

To determine

(a)

To analyze:

The effect on poverty and inequality when the income rise for high-income and low-income workers but raise more for high-income earners.

Explanation of Solution

Income is influenced by demandand supply in labor markets, which can lead to very high income for some people and very low incomes for others. Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income rise for both high-income and low-income workers but rise more for high-income earners then poverty will fall and inequality will rise, as people with high income will continue to earn more, thereby creating inequality in the economy. The level of people falling under the poverty line will increase.

In short, rich people will become richer and poor will become poorer.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality: Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Expert Solution

To determine

(b)

To analyze:

Effect on poverty and inequality if incomes fall for high-income and low-income workers but fall more for high-income earners.

Explanation of Solution

Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income falls for low-income and high-income workers, it will result in rise in poverty and fall in inequality.The income gap between different groups of people will reduce and so will inequality.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality : Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 15, Problem 1SCQ

Describe how each of these changes is likely to affect poverty and inequality:

Incomes rise for low-income and high-income workers, but rise more for the high-income earners.
Incomes fall for low-income and high-income workers, but fall more for high-income earners.

Expert Solution

To determine

(a)

To analyze:

The effect on poverty and inequality when the income rise for high-income and low-income workers but raise more for high-income earners.

Explanation of Solution

Income is influenced by demandand supply in labor markets, which can lead to very high income for some people and very low incomes for others. Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income rise for both high-income and low-income workers but rise more for high-income earners then poverty will fall and inequality will rise, as people with high income will continue to earn more, thereby creating inequality in the economy. The level of people falling under the poverty line will increase.

In short, rich people will become richer and poor will become poorer.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality: Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Expert Solution

To determine

(b)

To analyze:

Effect on poverty and inequality if incomes fall for high-income and low-income workers but fall more for high-income earners.

Explanation of Solution

Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income falls for low-income and high-income workers, it will result in rise in poverty and fall in inequality.The income gap between different groups of people will reduce and so will inequality.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality : Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution

To determine

(a)

To analyze:

The effect on poverty and inequality when the income rise for high-income and low-income workers but raise more for high-income earners.

Explanation of Solution

Income is influenced by demandand supply in labor markets, which can lead to very high income for some people and very low incomes for others. Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income rise for both high-income and low-income workers but rise more for high-income earners then poverty will fall and inequality will rise, as people with high income will continue to earn more, thereby creating inequality in the economy. The level of people falling under the poverty line will increase.

In short, rich people will become richer and poor will become poorer.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality: Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Expert Solution

To determine

(b)

To analyze:

Effect on poverty and inequality if incomes fall for high-income and low-income workers but fall more for high-income earners.

Explanation of Solution

Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income falls for low-income and high-income workers, it will result in rise in poverty and fall in inequality.The income gap between different groups of people will reduce and so will inequality.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality : Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Answer 8

Expert Solution

To determine

(a)

To analyze:

The effect on poverty and inequality when the income rise for high-income and low-income workers but raise more for high-income earners.

Explanation of Solution

Income is influenced by demandand supply in labor markets, which can lead to very high income for some people and very low incomes for others. Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income rise for both high-income and low-income workers but rise more for high-income earners then poverty will fall and inequality will rise, as people with high income will continue to earn more, thereby creating inequality in the economy. The level of people falling under the poverty line will increase.

In short, rich people will become richer and poor will become poorer.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality: Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

To determine

(a)

To analyze:

The effect on poverty and inequality when the income rise for high-income and low-income workers but raise more for high-income earners.

Answer 13

Explanation of Solution

Income is influenced by demandand supply in labor markets, which can lead to very high income for some people and very low incomes for others. Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income rise for both high-income and low-income workers but rise more for high-income earners then poverty will fall and inequality will rise, as people with high income will continue to earn more, thereby creating inequality in the economy. The level of people falling under the poverty line will increase.

In short, rich people will become richer and poor will become poorer.

Answer 14

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality: Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Answer 15

Expert Solution

To determine

(b)

To analyze:

Effect on poverty and inequality if incomes fall for high-income and low-income workers but fall more for high-income earners.

Explanation of Solution

Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income falls for low-income and high-income workers, it will result in rise in poverty and fall in inequality.The income gap between different groups of people will reduce and so will inequality.

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality : Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

To determine

(b)

To analyze:

Effect on poverty and inequality if incomes fall for high-income and low-income workers but fall more for high-income earners.

Answer 20

Explanation of Solution

Poverty implies people who are unableto fulfil their basic needs of life.Income inequality is referred to the disparity between people with higher and lower incomes.

If income falls for low-income and high-income workers, it will result in rise in poverty and fall in inequality.The income gap between different groups of people will reduce and so will inequality.

Answer 21

Economics Concept Introduction

Poverty line : The number of peoplebelow a certain level of income, called the poverty line, are said to be poor and lack basic amenities in life.

Income Inequality : Income inequality is measured by dividing the population of an economy into various groups then comparing the groups based on their incomes i.e. high incomes, middle incomes and low incomes.

Answer 22

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Describe how each of these changes is likely to affect poverty and inequality: Incomes rise for low-income and high-income workers, but rise more for the high-income earners. Incomes fall for low-income and high-income workers, but fall more for high-income earners.

Explanation of Solution

Explanation of Solution

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