ECN 1A Midterm: ECN 1A Midterm 1 Fall 2012

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turquoisegnu128

9 Jan 2019

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Many people would find such sales of waste repulsive. The us selling radioactive waste to poor countries to dispose of would be efficient. A free market in radioactive waste would be better than the current system. The supply of radioactive waste would be increased by such a policy. People living near waste dumps in poor countries would vote against such a policy. A free labor market is a good thing for the economy. It is bad that a free labor market results in low wages in the usa for unskilled labor. There is more inequality in wages in 2012 than there was in 1970 in the usa. Some inequality in wages is desirable for incentive reasons. If all prices in the economy equal the marginal cost of goods then we always achieve efficiency. If no two or more people can trade and all be happier through the trade then we.

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Person	Judy	Sandy	Dee	Shawntae	Martha
Income	$40,000	$75,000	$85,000	$35,000	$110,000

The above table lists the incomes for the 5 people who live on the remote island nation of Richland.

1. Refer to Table 21.1. If Martha's income doubled to $220,000 while the incomes of the other four residents did not change, what would happen to the original median income onâ Richlandia?

A.It would increase by $22,000.

B.It would increase by $44,000.

C.It would not change.

D.It would double.

2.When we compare shares of income earned by U.S. households over the past 40 years, which of the following statements about the distribution of income isâ true?

A.The percentage of total income represented by each quintile has decreased.

B.Lower income households gained at the expense of higher-income households.

C.The largest gain in income percentage is in the top 5% of households.

D.The percentage of total income represented by each quintile has increased.

3.From 1970 to 2012, the Gini coefficient in the United States has

A.dramatically decreased.

B.remained is relatively unchanged.

C.steadily increased.

D.more than doubled.

4.Income distribution in the United States over the past 40 years has become more equal.

True

False

5.Income inequality in the United States has increased in part due to technological change. How does technological change contribute to incomeâ inequality?

A.It is responsible for a majority of new products on the market, and these products are only affordable to higher-income households.

B.It reduces the cost of producing goods and therefore lowers the value of labor services.

C.It allows manufacturers to produce products with lessâ labor, and this reduction in the demand for labor lowers wages at all skill levels.

D.It has created many higher-income jobs for skilled and trainedâ workers, leaving the income of less-skilled workers relatively unchanged by comparison.

6.Income inequality in the United States has increased in part due to globalization. How does globalization contribute to incomeâinequality?

A.It allows domestic firms to hire low skilled workers anywhere in the world, putting U.S. workers in competition with foreign workers. This has caused the wages of low skilled workers to fall relative to the wages of other workers.

B.It increases the demand for a wide variety of products which in turn increases prices beyond the reach of average income

households.

C.It allows producers to exploit workers and reduce the wages they are willing to pay those workers.

D.It reduces the cost of producing goods and therefore lowers the value of labor services.

7.Rachel, a large pineapple producer in Hawaii, lobbies Congress to limit imports of pineapples to be able to sell her pineapples at a higher price and greatly increase her income. This possible source of income inequality is due to

A.technology changes.

B.rent seeking.

C.globalization.

D.productivity differences.

8.If growing income inequality results from changes in technology that, as a whole, make society better off, this will

A.decrease the size of the economic pie because of income inequality.

B.increase the size of the economic pie.

C.not change the size of the economic pie because the positive technology changes will be offset by the increases in income inequality.

D.result incomplete income inequality as technology continues to change in the future.

9.The belief that having more of something makes you happier but in successively smaller increments is called

A.utilitarianism.

B.diminishing marginal utility.

C.the benefits received principle.

D.transcendentalism.

10.The results of a survey conducted by Dan Ariely and Michael Norton found that Americans

A.show absolutely no preference for the amount of equality in wealth distribution in the nation.

B.have a preference for much less equality in wealth distribution than currently exists.

C.have a preference for roughly the amount of equality in wealth distribution that currently exists.

D.have a preference for much greater equality in wealth distribution than currently exists.

11.In the United States, the highest quintile of income earners contribute ________ of all federal tax dollars received, and the lowest quintile of income earners contribute ________ of all federal tax dollars received

A. 24%; 1.5%

B. 20%; 20%

C. 68.8%; 0.4%

D. 29.4%; 11.5%

12.The question "Is the U.S tax system disproportionate enough?" is a ________ question, and the question "How would higher taxes make the rich behave?" is a ________ question.

A. normative; positive

B. positive; normative

C. positive; positive

D. normative; normative

amaranthgoat434

There is no purely economic argument against a free market in body parts. With large numbers of potential sellers and large numbers of buyers, there is little risk of the market becoming monopolized. Doctors performing the transplants would be in a position to judge the quality of the purchased organs. A higher price would lead more people to sell their kidneys, etc., while a lower price would put the parts within the means of more buyers â so such markets would be able to continually adjust to supply and demand conditions. But many people would find such markets offensive. The sellers would most certainly be considerably poorer than the buyers, so serious inequality issues are involved. There is also the likelihood that some of the organs on these markets were not voluntarily sold, particularly when they come from countries with corrupt police forces. Learn about âtransplant tourismâ in this article from The Atlantic and read about legalizing international trade in organs in Time. Several perspectives from economists are presented at EconDebates Online (choose the âGovernment and Economyâ link, and then scroll down.) What are some of the problems, from an economic standpoint, with the current rules governing organ transplantation in the U.S.? What are some of the ethical concerns about legalizing organ trade? Do you support the legalization of a market for organ donations? Explain your reasoning, being careful to list specific ethical issues and economic considerations. Could buying and selling organs result in fewer organs available for transplant?

Article Links:

https://www.theatlantic.com/health/archive/2011/11/why-legalizing-organ-sales-would-help-to-save-lives-end-violence/248114/

http://content.time.com/time/world/article/0,8599,1833858,00.html

http://www.swlearning.com/economics/econ_debate.html

Hello, could you please assist with this discussion question for the Economics course? Thank you.

5) Go to the internet and find an article that discusses the problems of income inequality in the U.S. economy, summarize key points, and post in the Discussions area.

http://neweconomics.org/2014/12/why-inequality-is-an-economic-problem/

Why Inequality Is An Economic Problem

Rising economic inequality was a major driver of the financial crisis. With the OECD recently debunking âtrickle-downâ economics, our new report sets out the links between inequality, the growth in scale and influence of the financial sector, and the dangers for financial stability.

A fragile recovery

A return to growth in economies such as the UK and USA has been welcomed as a sign of recovery from the 2008 financial crisis. But as GDP picks up, so too has the widening gap between rich and poor.

The crisis may be over for the wealthy but the aftermath for ordinary workers depressed wages and growing debt is only getting worse.

Most nations have mustered only negligible growth and this has failed to benefit the vast majority of those nation's populations.

In the seven years following the crash, the UK has suffered the longest sustained decline in real wages since records began.

This decline hasn't has been shared equally across the income spectrum latest annual data up to the end of 2013 shows real earnings for the top 10% increasing by 3.9% and a 2.4% fall for the remaining 90%.

Households are once again piling on risky personal debt at a rate of almost $1billion a year.

Globally, wealth grew by 8.3% last year to $263 trillion, even as living standards stagnate for the majority. Income inequality has seen a sharp return the top 1% of earners have reaped 95% of the USA's economic gains since the crash.

Inequality increases as economies are financialised

Over the past four decades, financial sectors have been extensively deregulated and have expanded enormously as a result, particularly in the UK and USA.

This deregulation produced two systemic outcomes: finance has been freed to become the motor of the economy while the pursuit of greater equality of citizens, as was the focus after the second world war, has been abandoned.

Instead, the notion that unrestrained pursuit of wealth would trickle-down from rich to the poor has been embraced in the mainstream political and economic arenas.

Financial markets, products, and firms now play a much larger role in many areas; from pensions and social insurance to homes and public infrastructure.

Privatization and the doctrine of maximizing value for shareholders have increased the amount of economic activity focused on extracting the largest possible short-term profit. These trends are referred to collectively as âfinancialisationâ.

Until now the connections between this increasing prevalence of financial activities and the steady increase in economic inequality have not been clear. But when these two trends reached a boiling point in the mid-2000s they fuelled a global collapse of financial systems.

The polarization of wealth and incomes fed asset bubbles, risky financial activity,, and necessitated vast levels of household debt â resulting in the 2008 financial crash. With little done since to address these interconnected drivers, the threat of another crisis is very real.

This diagram lays out the seven indicators of economic instability, each fuelled by rising inequality and increasing financial sector activity:

Our report describes how these indicators laid the path for the 2008 crash, and threaten to do the same again:

Increasing inequality depresses demand since consumption levels depend more on the wages of those at the lower end of the income scale than the profits of the wealthy

In the face of stagnating wages, households rely increasingly on debt to maintain their lifestyles with rising asset prices, especially in residential housing, worsening this.

Financial liberalization allows money to flood into countries with trade deficits, such as the USA and the UK, providing the funds for debt-led consumption.

Snowballing wealth at the top increases risky financial speculation.

Inequality doesn't bring growth, it brings economic instability

In recent years there has been a marked slowing of growth across the world's wealthiest economies, with none returning to the growth trends experienced before the crisis. Many have begun to speculate that this stagnation could, in fact, be a permanent development meaning that wealthy economies are fundamentally unable to create enough demand to keep growing.

The mainstream political consensus has for decades now suggested that inequality is a price worth paying for economic growth.

But new research from the Organisation for Economic Co-operation and Development (OECD) shows definitively that this inequality/growth trade-off is false adding to a growing body of research showing that inequality actually prevents economies from growing. This points to a fundamental structural flaw in the economy: if the proceeds of growth are not shared, the pie stops growing.

The pursuit of higher returns for the already wealthy within this dwindling pie cannot persist forever. With wealth refusing year on year to trickle down, debt has been used to plug the wage-consumption gap for the rest.

The signals are showing quite plainly that this pursuit of growth, via inequality, is ineffective and unsustainable.

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ECN 1A Midterm: ECN 1A Midterm 1 Fall 2012

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