Question 1

What is the name of the model that best explains why an actor in a nationally broadcast television program earns so much more than an actor who is equally talented and productive but who performs in a local play?

Accepted Answer

The winner-take-all model suggests that in certain industries, such as entertainment, only a few individuals are able to capture a large share of the rewards, while the majority receive very little. In this case, the nationally broadcast television program actor is part of the small group that is able to capture a large share of the rewards due to their high level of visibility and popularity.

Question 2

Why is it unlikely that income inequality could ever be eliminated?

Accepted Answer

Workers will always have different skills, abilities, and productivities, which will naturally lead to income inequality. Even if all jobs were equally attractive and all workers were perfectly mobile, individuals would still earn different amounts based on their unique talents and contributions to the economy. Therefore, it is unlikely that income inequality could ever be eliminated completely.

Question 3

Felicia has an idea to provide a grocery home-delivery service in the developing country of Mongolia.What role would corruption play in the success of her business?

Accepted Answer

Corruption in developing countries can create obstacles for entrepreneurs and increase the costs of doing business. This can include bribes and kickbacks, which can be significant expenses for businesses. It can also lead to a lack of trust in government officials and difficulty in accessing necessary resources such as permits and licenses. All of these factors can discourage entrepreneurs from investing in their business and limit their potential for success.

Question 4

What theory would suggest that a Nobel Prize-winning economist should earn significantly more than other economists?

Accepted Answer

The winner-take-all theory suggests that in certain fields, such as economics, the top performers earn significantly more than their peers. This is due to the fact that the demand for their services is high and competition for these positions is fierce, resulting in a significant compensation differential. The fact that the economist has won a Nobel Prize only strengthens this argument, as it positions them as the ultimate winner in their field.

Question 5

What differentiates the U.S.income inequality ratio from that found in less-developed countries?

Accepted Answer

The United States has a lower income inequality ratio than many less-developed countries because even the poorest individuals in the United States generally earn more than the poorest individuals in less-developed countries. However, the United States still has a high income inequality ratio overall due to the large gap between the wealthiest individuals and the rest of the population.

Question 6

If Ty's daughter were to inform him that she wanted to be a bank teller and he were concerned about her ability to pay her bills,what economic theory could Ty use to convince his daughter to become an engineer instead?

Accepted Answer

The answer of If Ty's daughter were to inform him...

Question 7

What theory can explain why a CEO might earn so much more than other managers with similar experience and education at the same company?

Accepted Answer

The winner-take-all theory suggests that in certain professions or industries, a small number of individuals (in this case, top-level executives like CEOs) earn significantly higher salaries than others due to their unique skills, connections, or performance. This theory aligns with the phenomenon of CEOs earning much more than other managers with similar experience and education at the same company.

Question 8

The occupational crowding model of discrimination predicts

Accepted Answer

The occupational crowding model of discrimination suggests that when women start to enter certain male-dominated occupations, men's wages will fall and women's wages will rise. This is due to the increased competition and the breaking down of gender barriers. Therefore, option D is the correct answer. Option A is incorrect because the model does not specifically explain why men would earn less than women. Option B is incorrect because the model does not suggest that discrimination will be eliminated through firm competition. Option C is incorrect because the model does not predict that discrimination will become more severe without government intervention. Option E is incorrect because the model does not necessarily suggest financial advantages for women crowding into a single occupation.

Question 9

Belinda expects that her wages will increase over time.What theory justifies this expectation?

Accepted Answer

The life-cycle wage pattern theory suggests that individuals' wages increase over time as they gain more experience and skills, and move up in positions or industries. Belinda's expectation aligns with this theory.

Question 10

If households in the lowest income-earning bracket are doing relatively well compared to those in the highest income-earning bracket,the inequality ratio will

Accepted Answer

The inequality ratio, often measured by the Gini coefficient, is a measure of income distribution within a population. If households in the lowest income-earning bracket are doing relatively well compared to those in the highest income-earning bracket, it means there is less income disparity and more equal distribution of income. Therefore, the inequality ratio will fall.

Question 11

What is the approximate inequality ratio (richest 20 percent ÷ poorest 20 percent)in the United States?

Accepted Answer

According to recent data from the US Census Bureau, the approximate inequality ratio in the United States is 15.5, which means that the richest 20 percent of the population have 15.5 times the income/wealth of the poorest 20 percent.

Question 12

Approximately ________ percent of the total national income is owned by the poorest 40 percent (bottom two quintiles)of households in the United States.

Accepted Answer

The answer of Approximately ________ percent of the total national...

Question 13

The wages of those near retirement decrease slightly because these workers are

Accepted Answer

Wages of those near retirement may decrease slightly because, despite gaining additional experience, they might not be keeping up with new technologies, which can make them less competitive in the job market compared to younger workers who are more familiar with current technologies.

Question 14

What role does corruption play in creating income inequality?

Accepted Answer

The answer of What role does corruption play in creating...

Question 15

As a male nurse,Gregory often complains about the low pay he receives despite the fact that he has a significant amount of education.What economic theory explains his suppressed wage?

Accepted Answer

Occupational crowding theory suggests that when certain groups, such as women or minorities, are overrepresented in lower-paying jobs or sectors, it can also affect men in those roles, like nursing, leading to suppressed wages due to the oversupply of workers in that occupation.

Question 16

Which statement best represents the phenomenon of occupational crowding?

Accepted Answer

Occupational crowding refers to the phenomenon where certain occupations become dominated by one gender, leading to limited opportunities for individuals of the other gender. This statement best represents occupational crowding as it highlights the overrepresentation of women in certain jobs, which can limit the opportunities available for men in those fields.

Question 17

The pay for journalists is quite varied.A top-tier journalist often receives a steady flow of assignments,such as two weekly columns,and so earns generous pay.A lower-tier journalist,however,often experiences sporadic work assignments with little to no pay.What economic theory explains this situation?

Accepted Answer

The winner-take-all theory suggests that a small number of individuals in a highly competitive field, such as journalism, receive a disproportionate amount of the rewards and success, while the majority receive little to none. This explains why a top-tier journalist may receive a steady flow of high-paying assignments while a lower-tier journalist may struggle to find consistent work with adequate pay.

Question 18

Besides overt sex discrimination,women also might earn less than men in the workplace because women

Accepted Answer

Studies have shown that women tend to congregate in traditionally female-dominated occupations, such as teaching and healthcare, which are also often some of the lowest-paying jobs. This phenomenon, known as occupational segregation, contributes to the gender pay gap.

Question 19

What theory can partially explain why pink-collar jobs,such as nurse and dental hygienist,earn so little despite the important services they provide?

Accepted Answer

Occupational crowding theory suggests that when a large number of individuals (often women) enter a specific job market, such as nursing or dental hygiene, the increased supply of labor in that field can lead to lower wages. This theory can partially explain why pink-collar jobs, which are predominantly filled by women, tend to have lower earnings despite the critical services they provide.

Question 20

How can a stronger legal system reduce income inequality?

Accepted Answer

A stronger legal system can reduce corruption and encourage investment, which can in turn create job opportunities and increase economic growth. With more job opportunities, people can increase their income, thereby reducing income inequality.

Quiz 15: Income,inequality,and Poverty