EC120 Chapter Notes - Chapter 20: Welfare Trap, Invisible Hand, Negative Income Tax
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EC120 Full Course Notes
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Equilibrium wages equal the value of workers" marginal products. Differences in equilibrium wages result form differences in: Job characteristics: extend to which a job is pleasant and safe. The income distribution in a market economy may not be equitable or otherwise desirable. The invisible hand acts to allocate resources ef ciently. But it does not necessarily ensure that resources are allocated fairly. Poverty line: an absolute level of income set by the government for each family size below which a family is deemed to be in poverty. Poverty rate: the percentage of the population whose family income falls below the poverty line. Canada, like most countries except the u. s. , does not have an of cial measure of the poverty line. Low-income cutoff (lico): the level of income at which a household of a given size in a community with a given population spends 20% more than average on food, shelter, and clothing.