Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 28, Problem 11CQ
To determine
Fairness of income distribution.
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Chapter 28 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- What is the significance of the concept of rational ignorance? Question options: It explains why voters are swayed by single-issue voting. It explains why the majority of voters feel that their vote is important in determining the outcome of an election. It explains how false or exaggerated political advertising influences voting behavior. It explains why many people do not vote.arrow_forwardQ. 3arrow_forwardAssume a society consists of two economic groups: one group is rich and the other group is poor. Suppose that 50 percent of the population is rich while the other 50 percent of the population is poor. Consider two scenarios. Scenario A: The rich have $80,000 each, while the poor have $5,000 each. Scenario B: The rich have $11,000 each, while the poor have $900 each. If you only care about average income and not about equity, you would prefer ▼ Scenario A Scenario B , which has an average income of $........?? (Enter your response to the nearest dollar.) Now suppose that you only care about equity or inequality. In this case, you would prefer ▼ Scenario B Scenario A , which has a rich-to-poor ratio of .........?? (Round your response to one decimal place.) Finally, suppose you only care about living standards. In this case, you would prefer ▼ Scenario A Scenario B because it has lower poverty.arrow_forward
- Explain why majority rule respects the preferencesof the median voter rather than those of the averagevoter.arrow_forwardSuppose you go to a doctor, but your health insurance plan reimburses you for only 80 percent of the bill. This is an example of: A. coinsurance.B. a deductible.C. monopsony power.D. a deferred benefit plan.arrow_forwardWhich one of the following arguments about the legal consequences of marriage is not one that David Chambers makes: Marriage rules are hardly static and change over time with regard to their benefits and responsibilities. Permitting gay and lesbian couples to adopt children is likely to hinder rather than advance movements for single-parent adoption because it will corrode the myth of two parents needed for child rearing. The legal position for unmarried same sex and opposite sex "step parents" who live with a custodial parent are generally without legal significance. The benefits of marriage are likely to be unevenly distributed among same-sex couples according to social class and income.arrow_forward
- Suppose that 20 risk neutral competitors participate in a rent seeking game with a fixed prize of $500. Each player may invest as much money as he wishes in the political contest. The probability of winning is directly proportional to the candidate's share of the total rent-seeking investment. 1. What is the expected net benefit of a player if all other players invest $20 each? Write the net benefit as a function of the player's investment. 2. Solve the maximization problem to arrive at the profit-maximizing investment. Round to the nearest cent.arrow_forwardWith a certain medical insurance policy, the customer must first pay an annual $350 deductible, and then the policy covers 70% of the cost of x-rays. The first insurance claims for a specific year submitted by a person are for two x-rays. The first x-ray cost $600, and the second x-ray cost $900. How much, in total, will he need to pay for these x-rays? He will be responsible for $arrow_forwardDefine the following and give specific example for each: (i) Law of large numbers (ii) Actuarially fair (iii) Value of informationarrow_forward
- There are three groups of citizens who visit a beach. Group C, which is the farthest away, has to pay $100 to visit the beach for a day. Group B has to pay $75, and group A, the closest, has to pay $25. Group C visits the beach 2 times per year, group B visits 7 times per year, and group A visits 12 times per year. Assume that there are 100 individuals in each group, and that all individuals across groups are identical, except for their distance to the beach. Use this information to extrapolate and plot the demand curve for beach days for an individual (as was done in class and in the book); you can assume that if the cost was $110 then no trips would be taken. Then, calculate the total consumer surplus generated by the beach.arrow_forwardNo written by hand solution Suppose there are two sectors, call them A [agriculture] and M [manufacturing]. People earn say $5 an hour in agriculture and $10 an hour in manufacturing. Suppose we are interested in the share of the bottom 40% and the richest 20%. Let x be the share of people in manufacturing. Derive a formula that gives you the shares of income earned by the lowest 40% of the population and the richest 20% of the population as a function of x. This is a connection between structural transformation and the behavior of inequality.arrow_forward8arrow_forward
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