ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw

Exercise 5

Consider two communities. In one community, ten families have incomes of $100,000 each and ten families have incomes of $20,000 each. In the other community, ten families have incomes of $200,000 each and ten families have incomes of $22,000 each.
a. In which community is the distribution of income more unequal? In which community is the problem of poverty likely to be worse?
b. Which distribution of income would Rawls prefer? Explain.
c. Which distribution of income do you prefer? Explain.
d. Why might someone have the opposite preference?