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
expand_more
expand_more
format_list_bulleted
Question
Chapter 28, Problem 11CQ
To determine
Fairness of income distribution.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Why does sharecropping continue to exist as opposed to laborers renting land and paying for the rent with the proceeds of their harvest?
Sharecropping is a farming system in which owners of the land allow others to farm it and then the harvest is split, with some portion (let's say half) going to the laborer and some to the land owner. Renting land (the "English system") is an alternative in which laborers pay a fixed monetary rent and then keep all of the proceeds of their production. For hundreds of years commentators have pointed out that sharecropping lowers overall investment and effort and that renting both generates more revenue for owners and, on average, more revenue for laborers due to the harvest generally being much larger. However, when prices drop significantly for agricultural outputs, rents can exceed the total value of output under the English system. Given that in the English system rent returns more money to land owners and on average generates more income for…
How is opportunity cost treated in calculating cost of equity
Imagine there are two types of individuals, high types and low types. There is a degree that costs the
high type $7500 to complete while costing the low type $13,000 to complete.
Suppose a firm wants to use this degree to screen job applicants. They will pay those without the
degree $35000, and those with the degree $"S". What must "S" be in order for this degree to separate
high and low types? What would happen if this didn't hold?
Draw a diagram of your findings.
Chapter 28 Solutions
Economics: Private and Public Choice (MindTap Course List)
Knowledge Booster
Similar questions
- Which statement is NOT true? a) There are often disagreements over what is an equitable distribution of income. b) Both equity and efficiency are subjective concepts. c) Another term for equity is fairness. d) There are often tradeoffs between efficiency and equity.arrow_forwardExplain the wealth conversion principle.arrow_forwardIs there equal opportunity of economic advantage according to procedural fairness?arrow_forward
- Consider a society with three people (Atakan, Feyza and Nedim) who is trying to decide how much money to spend on schools. There are three options for spending on schools: H (High), M (Medium) or L (Low). These individuals rank the three options in the following way: Rank Atakan Feyza Nedim 1st Choice M L H 2nd Choice L H M 3rd Choice H M L Question -Would majority voting bring about a decision on how much to spend on schools? Explain why.arrow_forwardRefer to substantive judgements of fairness Is the lottery a fair way to allocate economic resourcesarrow_forwardIs the lottery a fair way to allocate economic resources? Discuss, referring to both of the following:a)procedural judgements of fairnessb)substantive judgements of fairnessarrow_forward
- Explain why according to the theory of rational ignorance, an individual will decide not to participate in the election process (vote).arrow_forwardSuppose there are two different neighborhoods in a city. One neighborhood has 400 Black residents and 600 white residents. The other neighborhood has 800 Black residents and 400 white residents. What is the Dissimilarity Index (DI) equal to?arrow_forwardWhat 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_forward
- 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.arrow_forwardQuestion 1 Imagine we live in a world with two types of skill sets: people with high ability and people with low ability. A diploma will cost a high ability person about 8K and will cost a low ability person about 20K. Businesses use education as a screening tool and they intend to pay 25k to workers without a diploma and $X to those with a diploma. In what range must X be to make this an effective screening tool? Your answer will include a set of equations showing the dollar range for both low ability and high ability people.arrow_forwardExplain why majority rule respects the preferencesof the median voter rather than those of the averagevoter.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning