Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 20, Problem 4CQQ
To determine
The 'original position' behind the veil of ignorance.
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Assume 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.
H10.
In-country 2, each month everyone is sent $7000 by the government, and no one can earn anything above that income (although they can spend it on whatever they want). In-country 3, there is a small percentage of people that make $100,000 a month, but everyone else earns between $6,000 and $10,000 a month.
Which of the two countries would John Rawls argue is more just? Using evidence from the class and readings, why or why not?
Which fact is Rawls's thought experiment of the "original position" behind the "veil of ignorance" meant to draw attention to? the station of life each of us was born into is largely a matter of luck outcomes are efficient only if everyone begins with equal opportunity most of the poor do not know how to find better jobs and escape poverty the rich have so much money that they don't know how to spend it all.
Chapter 20 Solutions
Principles of Microeconomics (MindTap Course List)
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