(a)
To indicate:
The effect of massive influx of low-skilled immigrants on the distribution of income.
Explanation of Solution
The massive influx of low skilled immigrants will affect income distribution because the unskilled worker receives less wage as compared to skilled labor. However,
Income Distribution:
Income distribution refers to the way in which total
(b)
To indicate:
The effect of occurring of a new baby boom on the distribution of income.
Explanation of Solution
A new baby boom will affect the income distribution and it will create an unequal distribution of income because a new baby boom will create high dependency on earners.
Income Distribution:
Income distribution refers to the way in which total GDP of a country is distributed in the economy. If everyone in the country earns almost the same amount of money, then the distribution of income is fair. If the income varies widely among the different classes of people in an economy, it is termed as unequal distribution of income.
(c)
To indicate:
The effect of new baby boomers which are entering in their 20s on the distribution of income.
Explanation of Solution
The new baby boomers entering their 20s that means the baby boomer are young and now they can contribute to the economy. However, the earning capacity is more in youth hence the fair income distribution will occur.
Income Distribution:
Income distribution refers to the way in which total GDP of a country is distributed in the economy. If everyone in the country earns almost the same amount of money, then the distribution of income is fair. If the income varies widely among the different classes of people in an economy, it is termed as unequal distribution of income.
(d)
To indicate:
The effect of baby boomers who are aged 65 or are older on the distribution of income.
Explanation of Solution
The new baby boomers of age 65 or older are those whose capacity of earning is decreased. As age 65 or older is the retirement age and this will create an unequal distribution of income.
Income Distribution:
Income distribution refers to the way in which total GDP of a country is distributed in the economy. If everyone in the country earns almost the same amount of money, then the distribution of income is fair. If the income varies widely among the different classes of people in an economy, it is termed as unequal distribution of income.
(e)
To indicate:
The effect of an increase in cash transfer payments on the distribution of income.
Explanation of Solution
The increase in cash transfer payment will create a fair distribution of income because cash transfer payment refers to the direct transfer of income by the federal government to the eligible person.
Income Distribution:
Income distribution refers to the way in which total GDP of a country is distributed in the economy. If everyone in the country earns almost the same amount of money, then the distribution of income is fair. If the income varies widely among the different classes of people in an economy, it is termed as unequal distribution of income.
(f)
To indicate:
The effect of in-kind transfer payments on the distribution of income.
Explanation of Solution
The increase in in-kind transfer payment will create an unfair distribution of income because it will be difficult to evaluate the value of service in-kind. However, it becomes easy to evaluate the service and provide cash accordingly.
Income Distribution:
Income distribution refers to the way in which total GDP of a country is distributed in the economy. If everyone in the country earns almost the same amount of money, then the distribution of income is fair. If the income varies widely among the different classes of people in an economy, it is termed as unequal distribution of income.
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Chapter 17 Solutions
EBK EXPLORING ECONOMICS
- What are the answers for a,b,c,d? Are they supposed to be numerical answers or in terms of a variable?arrow_forwardSue is a sole proprietor of her own sewing business. Revenues are $150,000 per year and raw material (cloth, thread) costs are $130,000 per year. Sue pays herself a salary of $60,000 per year but gave up a job with a salary of $80,000 to run the business. ○ A. Her accounting profits are $0. Her economic profits are - $60,000. ○ B. Her accounting profits are $0. Her economic profits are - $40,000. ○ C. Her accounting profits are - $40,000. Her economic profits are - $60,000. ○ D. Her accounting profits are - $60,000. Her economic profits are -$40,000.arrow_forwardSelect a number that describes the type of firm organization indicated. Descriptions of Firm Organizations: 1. has one owner-manager who is personally responsible for all aspects of the business, including its debts 2. one type of partner takes part in managing the firm and is personally liable for the firm's actions and debts, and the other type of partner takes no part in the management of the firm and risks only the money that they have invested 3. owners are not personally responsible for anything that is done in the name of the firm 4. owned by the government but is usually under the direction of a more or less independent, state-appointed board 5. established with the explicit objective of providing goods or services but only in a manner that just covers its costs 6. has two or more joint owners, each of whom is personally responsible for all of the partnership's debts Type of Firm Organization a. limited partnership b. single proprietorship c. corporation Correct Numberarrow_forward
- The table below provides the total revenues and costs for a small landscaping company in a recent year. Total Revenues ($) 250,000 Total Costs ($) - wages and salaries 100,000 -risk-free return of 2% on owner's capital of $25,000 500 -interest on bank loan 1,000 - cost of supplies 27,000 - depreciation of capital equipment 8,000 - additional wages the owner could have earned in next best alternative 30,000 -risk premium of 4% on owner's capital of $25,000 1,000 The economic profits for this firm are ○ A. $83,000. B. $82,500. OC. $114,000. OD. $83,500. ○ E. $112,500.arrow_forwardOutput TFC ($) TVC ($) TC ($) (Q) 2 100 104 204 3 100 203 303 4 100 300 400 5 100 405 505 6 100 512 612 7 100 621 721 Given the information about short-run costs in the table above, we can conclude that the firm will minimize the average total cost of production when Q = (Round your response to the nearest whole number.)arrow_forwardThe following data show the total output for a firm when specified amounts of labour are combined with a fixed amount of capital. Assume that the wage per unit of labour is $20 and the cost of the capital is $100. Labour per unit of time 0 1 Total Output 0 25 T 2 3 4 5 75 137 212 267 The marginal product of labour is at its maximum when the firm changes the amount of labour hired from ○ A. 0 to 1 unit. ○ B. 3 to 4 units. OC. 2 to 3 units. OD. 1 to 2 units. ○ E. 4 to 5 units.arrow_forward
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- 3. Consider a course allocation problem with strict and non-responsive preferences. Isthere a mechanism that is efficient and strategy-proof? If so, state the mechanismand show that it satisfies efficiency and strategyproofness. {hint serial dictatorship}4. Consider a course allocation problem with responsive preferences and at least 3students. Is there a mechanism that is efficient and strategy-proof that is not theSerial Dictatorship? If so, state the mechanism and show that it satisfies efficiencyand strategyproofness.5. Suggest a mechanism for allocating students to courses in a situation where preferences are non-responsive, and study its properties (efficiency and strategyproofness). Please be creativearrow_forward2. a) Consider a market where one firm (firm 1) currently produces, but a second firm (firm 2) is intending to enter and sell an identical product. The market has inverse demand given by p = 40 – Q, where Q is the total output sold in the market. Firm 1 has a marginal cost of 16 and firm 2 has a marginal cost of c < 16, with no fixed cost for either firm. Firm 2 has a choice of competing on price or quantity, with firms making their choices simultaneously (i.e. the market will be either a Bertrand or Cournot duopoly). If you were advising firm 2 on entering this market, how would you advise it to compete? To what extent would the size of firm 2’s cost advantage affect your advice? b) Now assume that firm 2 is aware that other firms are considering entering the market, so the market may over time change from a duopoly to an oligopoly with more than two firms. This would not change the nature of competition (i.e. any additional firms would set price or quantity in line with the first…arrow_forward1. Consider two firms (i=1,2) interacting in the market. Assume that firms compete in quantities and therefore they choose either to cooperate or not in each round. If a firm deviates it earns monopoly profit for a round and a punishment phase will follow from next round onwards (for ever) where both firms choose the Cournot quantity. Assume a discounting factor & and that firms meet in the market in every period. The demand facing the industry is p = 1 92. Let Q = q1 + 92 denote the aggregate industry output - 91 - level. Assume further that production is costless.arrow_forward
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