Question 1

Figure 18-6  Figure 18-6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 18-6.If area X = 2,060,area Y = 240,and area Z= 2,700,calculate the Gini coefficient for Syldavia.

Accepted Answer

To calculate the Gini coefficient, we need to first find the area between the diagonal line and the Lorenz curve (area A). This can be calculated as:

A = 1/2 - (Y/Area of triangle XYZ)

Y/Area of triangle XYZ = 240/(2060+240+2700) = 0.06

So, A = 1/2 - 0.06 = 0.44

Next, we need to find the area under the Lorenz curve (area B). This can be calculated as:

B = 1/2 + (X/Area of triangle XYZ) + (Z/Area of triangle XYZ) - A

X/Area of triangle XYZ = 2060/(2060+240+2700) = 0.64
Z/Area of triangle XYZ = 2700/(2060+240+2700) = 0.30

So, B = 1/2 + 0.64 + 0.30 - 0.44 = 1.10

Finally, the Gini coefficient is calculated as the ratio of area A to the sum of areas A and B:

G = A / (A + B) = 0.44 / (0.44 + 1.10) = 0.29

However, it is important to note that the Gini coefficient is usually reported as a percentage rather than a decimal, so the answer would be 29%. None of the answer choices match the calculated value, but the closest one is C, which is 0.46. It's possible there was an error in the given values for areas X, Y, and Z.

Question 2

The Gini coefficient is measured by

Accepted Answer

The answer of The Gini coefficient is measured by
...

Question 3

Between 1980 and 2011,income inequality in the United States has increased in part due to rapid technological change.How does technological change contribute to income inequality?

Accepted Answer

Technological advancements tend to complement the skills of the well-educated while displacing the labor services of unskilled and low-skilled workers. This leads to a decline in the wages of low and unskilled workers, while the wages of well-educated workers increase, ultimately contributing to income inequality.

Question 4

As the value of the Gini coefficient approaches one

Accepted Answer

The Gini coefficient measures income inequality on a scale of 0 to 1, with 0 indicating perfect equality (everyone has the same income) and 1 indicating perfect inequality (one person has all the income and everyone else has none). As the value of the Gini coefficient approaches one (i.e., gets closer to 1), income distribution becomes more unequal.

Question 5

Suppose the United States has a Gini coefficient of 0.4 and Sweden has a Gini coefficient of 0.25.Which of the following statements is true?

Accepted Answer

A lower Gini coefficient indicates a more equal distribution of income. Therefore, Sweden has a more equal distribution of income compared to the United States.

Question 6

Figure 18-5  Figure 18-5 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 18-5.The highest 20 percent of households

Accepted Answer

The answer of Figure 18-5  Figure 18-5 shows the...

Question 7

Figure 18-5  Figure 18-5 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 18-5.The middle 20 percent of households

Accepted Answer

The answer of Figure 18-5  Figure 18-5 shows the...

Question 8

Figure 18-6  Figure 18-6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 18-6.Which country has the more unequal distribution of income?

Accepted Answer

The Lorenz curve for Syldavia is located below the Lorenz curve for Islandia, indicating that a smaller proportion of the population in Syldavia holds a larger share of the country's income compared to Islandia. Thus, Syldavia has a more unequal distribution of income.

Question 9

Figure 18-6  Figure 18-6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 18-6.If area X = 2,060,area Y = 240,and area Z = 2,700,calculate the Gini coefficient for Islandia.

Accepted Answer

The answer of Figure 18-6  Figure 18-6 shows the...

Question 10

A statistical tool used to measure inequality is

Accepted Answer

The Gini coefficient is a commonly used statistical tool to measure inequality. It is based on the Lorenz curve, which plots the cumulative share of income or wealth held by different segments of the population. The Gini coefficient is a summary statistic that measures the extent to which the actual distribution of income or wealth deviates from a perfectly equal distribution, where the coefficient ranges from 0 (perfect equality) to 1 (perfect inequality). Therefore, the Gini coefficient can assess and compare the degree of inequality across different countries, regions, or time periods. The other options, such as the absolute and relative poverty rates, focus on the extent of deprivation or hardship experienced by individuals or households, rather than the overall inequality in the distribution of resources.

Question 11

What is the poverty rate?

Accepted Answer

The poverty rate refers to the percentage of the population earning an annual income below the poverty line, according to the federal government's definition. This definition takes into account factors such as family size and location to determine an income threshold below which a person is considered to be living in poverty.

Question 12

Suppose the equilibrium price and quantity of a 12-pack of Dr.Pepper are $5.00 and 10,000 12-packs,respectively,and the government decides to impose a $1.00 tax on every 12-pack of carbonated soft drinks.Draw two supply and demand graphs,one showing the excess burden of the tax when supply is less elastic and the other showing the excess burden of the tax when supply is more elastic.Identify the excess burden of the tax on each graph.On which graph is the excess burden the greatest?

Accepted Answer

The answer of Suppose the equilibrium price and quantity of...

Question 13

As the value of the Gini coefficient approaches zero

Accepted Answer

The Gini coefficient measures income inequality, with a value of 0 indicating perfect equality (each person has the same income) and a value of 1 indicating perfect inequality (one person has all the income). Therefore, as the Gini coefficient approaches zero, income distribution becomes less unequal, meaning there is a more equal distribution of income among the population.

Question 14

Refer to the Article Summary.Suppose the sale of marijuana is legalized in Florida,and the state decides to charge a tax of $50 per ounce on each sale,with the state claiming that retailers will bear the entire burden of this tax.Draw a graph illustrating the situation where retail outlets would bear the entire tax burden of $50 per ounce of marijuana.Explain what would need to be true about the demand for marijuana for retailers to bear the entire burden of this tax,and if this would likely occur if marijuana sales were legalized.

Accepted Answer

The answer of Refer to the Article Summary.Suppose the sale...

Question 15

Figure 18-4 
-Refer to Figure 18-4.Rank the above panels in terms of most unequal income distribution to least unequal income distribution.

Accepted Answer

Panel B shows the highest level of income inequality, followed by Panel C and then Panel A. This is because Panel B has a larger portion of the population in the lower income groups, while Panel A has a larger portion in the middle income groups, and Panel C has a more evenly distributed population across income groups. Therefore, the correct ranking from most to least unequal income distribution is Panel B, Panel C, and Panel A.

Question 16

In the United States

Accepted Answer

The income tax system in the United States has a progressive structure, where higher income earners pay a higher percentage of their income in taxes. This progressive tax system does have an impact on the distribution of income, as it helps to reduce the gap between the before-tax and after-tax distributions. Studies have shown that the after-tax income distribution in the US is more equal than the before-tax distribution. However, income mobility in the US is relatively low, and once a person is in poverty, it can be difficult for them to escape it. So, option A and C are incorrect.

Question 17

Between 1980 and 2011,income inequality in the United States has increased in part due to expanding international trade.How does expanding international trade contribute to income inequality?

Accepted Answer

Expanding international trade allows domestic firms to hire low-skilled workers in other countries, which puts American workers in competition with these workers. This competition depresses the wages of unskilled workers in the U.S. relative to the wages of other workers, contributing to income inequality.

Question 18

What is the United States government's formal definition of the poverty line?

Accepted Answer

The answer of What is the United States government's formal...

Question 19

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 percent is damaging to the country?

Accepted Answer

The concern that further increases in marginal tax rates may reduce work, saving, and investment, thereby reducing economic growth, is not directly related to the increase in the share of income earned by the 1 percent, but rather a concern about the impact of high taxes in general. A, B, and D are all concerns specifically related to income inequality and its potential negative consequences for society and the economy.

Question 20

Figure 18-3 -Refer to Figure 18-3.The figure above shows a demand curve and two supply curves,one more elastic than the other.Use Figure 18-3 to answer the following questions. a.Suppose the government imposes an excise tax of $1.00 on every unit sold.Use the graph to illustrate the impact of this tax. b.If the government imposes an excise tax of $1.00 on every unit sold,will the consumer pay more of the tax if the supply curve is S₁ or S₂? Refer to the graphs in your answer. c.If an excise tax of $1.00 on every unit sold is imposed,will the revenue collected by the government be greater if the supply curve is S₁ or S₂? d.If the government imposes an excise tax of $1.00 on every unit sold,will the deadweight loss be greater if the supply curve is S₁ or S₂?

Accepted Answer

The answer of Figure 18-3 
-Refer to Figure 18-3.The figure...

Quiz 18: Public Choice,taxes,and the Distribution of Income

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.If area X = 2,060,area Y = 240,and area Z= 2,700,calculate the Gini coefficient for Syldavia.

The Gini coefficient is measured by

Between 1980 and 2011,income inequality in the United States has increased in part due to rapid technological change.How does technological change contribute to income inequality?

As the value of the Gini coefficient approaches one

Suppose the United States has a Gini coefficient of 0.4 and Sweden has a Gini coefficient of 0.25.Which of the following statements is true?

Figure 18-5 Figure 18-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-5.The highest 20 percent of households

Figure 18-5 Figure 18-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-5.The middle 20 percent of households

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.Which country has the more unequal distribution of income?

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.If area X = 2,060,area Y = 240,and area Z = 2,700,calculate the Gini coefficient for Islandia.