Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 20, Problem 3CQQ
To determine
The point where utilitarian believes that the redistribution is worth.
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A utilitarian believes that the redistribution ofincome from the rich to the poor is worthwhile aslong asa. the worst-off members of society benefit from it.b. those contributing to the system are in favor of it.c. each person’s income, after taxes and transfers,reflects his marginal product.d. the distortionary effect on work incentives is nottoo large.
The table below is an illustration of Pareto efficiency criterion after the implementation of a state income policy in some selected Ministries .
Before policy. After policy
Ministry A. 400 800
Ministry B. 200 200
Ministry C . 300 300
Total. 900 1300
Is there a Pareto improvement? Why?
Government introduces a new income guarantee program for low-income families. Consider the program with an income guarantee of $5000 and a benefit reduction
rate of 25%. A person can work up to 2,000 hours per year at $15 per hour.
a. Draw the person's budget constraint without and with the income guarantee. Label as many things as you humanly can.
b. Who would be affected by this program and who would not (use yearly income and number of hours worked to describe the affected and unaffected groups)?
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Principles of Microeconomics (MindTap Course List)
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- Is work on the part of welfare recipients a reasonable expectation? Does government have any business getting involved in the personal lives of welfare recipients?arrow_forwardThe table below is an illustration of Pareto efficiency criterion after the implementation of a state income policy in some selected Ministries . Before policy. After policy Ministry A. 400 800 Ministry B. 200 200 Ministry C . 300 300 Total. 900 1300 Analyse the welfare condition of the Ministries after the income policy.arrow_forwardThe median earnings for a 25 to 34 year old, full-time, year round worker with a high school education was about $31,830 in 2016, while similar workers with a bachelor's degree (but no further education) earned $49,990, and as a result, they pay more income tax. a. There is a private benefit for individuals who attend college and earn a bachelor's degree. b. Does an individual's attainment of a bachelor's degree generate an externality? There is no way to determine whether there is an externality in this case. No externality exists because all of the benefits of a college education are private. A positive externality exists because college educated individuals pay higher taxes and are often considered more valuable to employers than individuals without college diplomas. A negative externality exists because individuals who receive a bachelor's degree could have spent the time working instead of attending college. c. The private market for college education results in bachelor's degrees…arrow_forward
- 1. A government economist, Mollie Orshanky, first calculated this in 1963 by multiplying the cost of a very minimal diet by 3, as a 1955 government study had determined that the typical American family spent 1/3 of its income on food. Group of answer choices a. episodic poverty b. popularity index c. welfare line d. poverty linearrow_forwarda. Describe the basic self-selection issue involved whenever discussing the returns to education. b. Does the fact that some high school or college dropouts go on to earn vast amounts of money (e.g., Bill Gates dropped out of Harvard without ever graduating) contradict the self-selection story? c. Most government-provided job training programs are optional to the worker. Describe how the self-selection issue might be used to call into question empirical results suggesting there are large economic benefits to be gained by requiring all workers to receive government-provided job training.arrow_forwardBack to Assignment Attempts 0.8 Keep the Highest 0.8/41 4. Redistributive philosophies and incentives Consider a society consisting of two people. Kevin earns an income of $115,000 per year and Maria earns an income of $40,000 per year. The government is considering a redistribution plan that would impose a 15% tax on Kevin's income and give the revenue to Maria. Without any incentive distortion, Kevin would retain $97,750 and Maria would end up with $57,250. However, let us assume that since Kevin will not receive all the income he earns, he decides to work less and earn an income of only $95,000, of which 15% x $95,000 $14,250 will be owed in taxes. With the redistribution plan, Kevin will take home an income of s The $14,250 that Kevin pays in taxes will be transferred by the government to Maria. Let us assume that since Maria now receives payment from the government, she will not work as many hours and will earn an income from work of only $35,000 instead of her initial $40,000.…arrow_forward
- Which of the following is NOT one of the reasons for the "welfare state"? Select one: a. Reducing poverty and providing access to healthcare b. Alleviating income inequality c. Alleviating economic insecurity d. Increasing economic equalityarrow_forwardThe income threshold used by the organization International Poverty Line for extreme poverty a. Is a guideline for policy makers and not an exact “tipping point” at which point a person falls into extreme poverty. b. Is adjusted for price differences across countries. c. Is one of several thresholds sometimes used to discuss poverty that show that the percentage of people living in poverty has been declining in recent decades. d. Is agreed on by all organizations working on poverty. e. All of the above except d.arrow_forwardIn California, a welfare recipient is eligible for welfare benefits of $645. Benefits are reduced by 50 cents for every dollar of earnings. Consider Elizabeth, a resident of California, who can earn $10 per hour. a. If she works 10 hours, how much are her earnings, how much is her welfare benefit, and how much is her income? b. After Elizabeth works a certain number of hours, she does not receive any benefit at all. What is that number of hours? c. Use your answer to parts a and b to plot her budget constraint. d. Sketch a set of indifference curves consistent with Elizabeth's participating in the labor marketarrow_forward
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