Question 1

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

The answer of Figure 18-4 
-Refer to Figure 18-4. Rank...

Question 2

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 3

A statistical tool used to measure income inequality is

Accepted Answer

The Gini coefficient is a commonly used measure of income inequality. It calculates the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution. The coefficient is expressed as a number between 0 and 1, with 0 indicating perfect equality and 1 representing absolute inequality where one person has all the income.

Question 4

During the past 30 years, 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 has led to increased competition between domestic and foreign low-skilled workers, depressing wages for U.S. workers without specialized skills. This has contributed to income inequality, as those with specialized skills are able to demand higher wages in the global market.

Question 5

During the past 30 years, 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

Technology complements the skills of the well-educated while rendering redundant the labor services of unskilled and low-skilled workers. This causes a decline in the wages of low and unskilled workers relative to other workers. The increasing use of technology has led to the growth of high-skill jobs that require specialized knowledge and increased education, while jobs that require lower levels of education and training have decreased as this work is often automated or outsourced to other countries. The wages of high-skill workers have increased as the demand for their skills has grown, while the wages of low-skill workers have stagnated or decreased. This has led to an increase in income inequality.

Question 6

As the value of the Gini coefficient approaches zero

Accepted Answer

The Gini coefficient measures income distribution where a value of zero represents perfect equality (everyone has the same income) while a value of 1 represents 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 7

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 8

For the top 1 percent of income distribution, the share of federal individual income taxes paid by households in this group in 2015 was ________ percent.

Accepted Answer

According to the IRS, the top 1 percent of income earners had an average income of $1.4 million in 2015 and paid approximately 44 percent of all federal individual income taxes.

Question 9

As the value of the Gini coefficient approaches one

Accepted Answer

The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality). As the value of the Gini coefficient approaches one, income distribution becomes more unequal. This means that a higher share of the total income is earned by a smaller percentage of the population, and a larger percentage of the population earns a smaller share of the total income. Thus, there is greater income inequality when the Gini coefficient is closer to one.

Question 10

For the top 1 percent of income distribution, the share of total income earned by households in this group was about ________ percent in 2016.

Accepted Answer

The answer of For the top 1 percent of income...

Question 11

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

Syldavia has a more unequal distribution of income because its Lorenz curve is farther from the line of perfect equality (the diagonal line) compared to Islandia's Lorenz curve. This indicates that a smaller portion of the population controls a larger portion of the country's income.

Question 12

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 than the United States.

Question 13

What is the poverty rate?

Accepted Answer

The poverty rate is commonly defined as the percentage of the population earning an annual income below the poverty line, which is determined by the federal government. This definition is used by government agencies, non-profit organizations, and researchers to track poverty levels and determine eligibility for government programs and assistance.

Question 14

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 15

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 16

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 when the supply curve is S₁ and when the supply curve is S₂. 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...

Question 17

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 18

The Gini coefficient is measured by

Accepted Answer

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

Question 19

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 for Syldavia, we first need to find the area between the diagonal line (line of perfect equality) and the Lorenz curve for Syldavia. This area consists of area X (2,060) and area Y (240). 
Total area under the diagonal line is (1/2) * 100 * 100 = 5,000.
So, the area between diagonal line and Lorenz curve for Syldavia is 2,060 + 240 = 2,300.
The Gini coefficient is then calculated as (Z - A) / Z, where Z is the total area under the diagonal line (5,000) and A is the area between the diagonal line and Lorenz curve. 
Therefore, Gini coefficient for Syldavia = (5,000 - 2,300) / 5,000 = 0.46. 
Hence, the answer is C.

Question 20

Article Summary
State tax revenue from marijuana sales in Colorado have surpassed $500 million since its legalization in January 2014. Colorado has imposed three types of state taxes on marijuana: a 2.9% sales tax on medical marijuana, a 15% special sales tax for recreational use, and a 15% excise tax on wholesale marijuana transfers. About half of the accumulated tax revenue has gone to K-12 education, with over $100 million used to fund school construction projects. Twenty-five percent of the tax is being spent on substance abuse prevention and treatment programs.

-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 Article Summary
State tax revenue from marijuana sales...

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

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

A statistical tool used to measure income inequality is

During the past 30 years, income inequality in the United States has increased in part due to expanding international trade. How does expanding international trade contribute to income inequality?

During the past 30 years, 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 zero

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

For the top 1 percent of income distribution, the share of federal individual income taxes paid by households in this group in 2015 was ________ percent.

As the value of the Gini coefficient approaches one

For the top 1 percent of income distribution, the share of total income earned by households in this group was about ________ percent in 2016.

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?

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?

What is the poverty rate?

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.

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

The Gini coefficient is measured by

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.