The percentage of income earned by poor and rich in the US.
Answer to Problem 1CQQ
Option 'b' is correct.
Explanation of Solution
Option (b):
Poverty line is the line that determines the minimum income required to meet the basic requirements of a quality life by the people. The household with family income less than the poverty line is said to be poor and those who earn very much above the poverty line are considered to be rich by the government. According to the available data about the US economy, the income distribution is very unequal. About the poorest, one-fifth of the total population earns about 4 percent of the income of the economy, whereas the top one-fifth of the rich population earns about 50 percent of the US total economy income today according to the sources.
From the reliable sources, it is obtained that about 4 percent of the total income is earned by the poorest fifth of the population and about 50 percent of the total income is earned by the richest fifth of the population. Since option 'b' gives the values equal to the obtained value, option 'b' is correct.
Option (a):
The data sources reveal that about 4 percent of the income of the US economy is earned by the poorest fifth of the economy, while 50 percent by the richest fifth. Since the option explains that the richest fifth of the economy earns 70 percent and the poorest fifth earns 2 percent which are incorrect to the obtained values, option 'a' incorrect.
Option (c):
The data sources reveal that about 4 percent of the income of the US economy is earned by the poorest fifth of the economy, while 50 percent by the richest fifth. Since the option explains that the richest fifth of the economy earns 35 percent and the poorest fifth earns 6 percent which are incorrect to the obtained values, option 'c' is incorrect.
Option (d):
The data sources reveal that about 4 percent of the income of the US economy is earned by the poorest fifth of the economy, while 50 percent by the richest fifth. This means that there is a high level of inequality in the distribution of income that exists in the economy. Since the option explains that the richest fifth of the economy earns 25 percent and the poorest fifth earns 8 percent which denotes lower levels of inequality in income distribution, they are incorrect to the obtained values, and thus option 'd' is incorrect.
Concept introduction:
Income inequality: Income inequality represents the unequal distribution of household or individual income among various economic participants of the society.
Want to see more full solutions like this?
Chapter 20 Solutions
Principles Of Economics, Ap Edition, 9781337292603, 1337292605, 2018
- When the price of a good or a service increases, _______? Group of answer choices The demand curve shifts in the same direction. The supply curve shifts in the opposite direction. The demand curve shifts in the opposite direction. There is a movement along the demand curve.arrow_forwardA foreign country to which we export but from which we do not import would do ______ according the Circular Flow Diagram? Group of answer choices Sell and Buy (or Rent). Sell, but does not buy. Buys, but does not sell. Does not sell nor buys.arrow_forwardNot use ai pleasearrow_forward
- After the holiday season, many of us find ourselves thinking, “What will I do with another case for my iPad?” Often, both the gift giver and gift receiver could be made better off (that is, receive a higher level of utility or happiness) if cash had been given instead. To understand the economic rationale behind this, economists turn to the basic consumer theory model of budget constraints and indifference curves. Recall that an indifference curve maps out all possible consumption bundles of goods that yield the same level of utility to a given consumer. Indifference curves tell us nothing about what we can afford, but rather tell us how happy a particular bundle will make us. On the other hand, a budget constraint shows the consumption bundles that we can buy given our income and the prices of goods. Similarly, a budget constraint says nothing about what we would like to buy, but rather what we can afford. Suppose you consume only two types of goods: magazines and food. You have $300…arrow_forwardCho is a truck driver living in Miami who performs freelance health consulting to supplement her normal income. At an hourly wage rate of $45, she is willing to consult 5 hours per week. Upping the wage to $65 per hour, she is willing to consult 14 hours per week. Using the midpoint method, the elasticity of Cho’s labor supply between the wages of $45 and $65 per hour is approximately , which means that Cho’s supply of labor over this wage range is .arrow_forwardWhere do I draw the demand and supply linearrow_forward
- It would be inefficient but possible for this economy to produce? 100 1dryers 90 80 C 70 A 60 50 D B 40 30 20 10 10 20 30 40 50 60 70 80 washers O 90 dryers and 20 washers. 50 dryers and 50 washers. O Two of the answers are correct. O 60 dryers and 20 washers.arrow_forwardignore what i put and find the correct answerarrow_forwardA foreign country to which we export but from which we do not import would _____ according the Circular Flow Diagram? • Sell and Buy (or Rent). • Does not sell nor buys. • Sell, but does not buy. • Buys, but does not sell.arrow_forward
- For a certain health insurance policy, losses are uniformly distributed on the interval [0, b].The policy has a deductible of $180 and the expected value of the non-reimbursed portionof a loss is $144. Calculate barrow_forwardfacebook (not Mark Zuckerberg) would do which action according the Circular Flow diagram? Buys, but does not sell. Does not sell nor buys. Sell, but does not buy. Sell and Buy (or Rent).arrow_forwardIt would be impossible for this economy to produce? dryers 100 90 C 80 70 A 60 50 D B 40 30+ 20- 10 10 20 30 40 50 60 70 80 OD C OA B washers 13arrow_forward
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
