Question 1

In a Lorenz diagram for income, the line of equality shows

Accepted Answer

The line of equality in a Lorenz diagram represents a situation where everyone has the same income, indicating perfect income equality.

Question 2

The distribution of income in Australia is characterised by the following relationship between the mean, median and mode incomes:

Accepted Answer

In a positively skewed distribution, which is typical for income distributions, the mean is usually greater than the median, and the median is greater than the mode. This is because high-income outliers pull the mean up more than they affect the median or mode.

Question 3

With respect to redistribution, one reason the "big tradeoff" exists is because

Accepted Answer

Redistribution can weaken the incentive to work because individuals might not see the full benefit of their labor if a significant portion of their income is taxed away to fund redistribution programs. This can lead to less work effort among both those who pay more in taxes and those who receive the benefits.

Question 4

Lee earns more than does Pat. Which of the following can explain why?

Accepted Answer

All of the options provided could potentially explain why Lee earns more than Pat. Discrimination (A) can lead to wage disparities between individuals. A greater degree of specialization (B) often results in higher income because specialized skills can be more valuable in the market. Having more human capital (C), which includes education, skills, and experience, can also lead to higher earnings.

Question 5

Wealth differs from income in that

Accepted Answer

Wealth refers to the total value of all assets owned by an individual or entity, including money, real estate, investments, etc., minus any debts. Income, on the other hand, is the flow of money received over a period of time, typically through work, investments, or other sources. Therefore, income is what you earn, while wealth is what you own.

Question 6

Which of the following will NOT on its own increase a worker's human capital?

Accepted Answer

Human capital refers to the attributes that workers possess that contribute to their productivity, such as skills, knowledge, and experience. Training, schooling, and work experience directly increase a worker's human capital by enhancing their skills and knowledge. A higher wage rate, however, is a result of increased human capital rather than a cause of it.

Question 7

If both rich and poor families pay 25 per cent of their income in taxes, the tax scheme is _______.

Accepted Answer

A proportional tax system is one in which all taxpayers pay the same percentage of their income, regardless of how much they earn.

Question 8

A firm that discriminates has _______ a non- prejudiced firm and _______ .

Accepted Answer

A firm that discriminates incurs higher costs because it does not necessarily hire the most efficient workers but rather makes decisions based on prejudice. In a competitive industry, this inefficiency can lead to its inability to survive as it cannot compete effectively with non-prejudiced firms that operate more efficiently and at lower costs.

Question 9

-In the above figure, the straight line between the lower left corner and the upper right corner shows

Accepted Answer

The straight line between the lower left corner and the upper right corner in a Lorenz curve diagram represents perfect equality in income distribution, where everyone has the same income.

Question 10

The Australian Gini ratio for income has _______ within recent decades, which means economic inequality has _______.

Accepted Answer

The Australian Gini ratio for income has increased within recent decades, indicating that economic inequality has also increased.

Question 11

-The above figure shows the Lorenz curves for four different countries. Which country has the most unequal distribution of income?

Accepted Answer

The Lorenz curve farther from the line of equality (45-degree line) indicates a more unequal distribution of income. Country D's Lorenz curve is the farthest from the line of equality, showing the most unequal distribution of income.

Question 12

Computers and laser scanners are _______ for low- skilled labour and _______ for high- skilled labour. The introduction of these technologies _______ the wage rate of high- skilled workers and _______
The wage rate of low- skilled workers.

Accepted Answer

Computers and laser scanners act as substitutes for low-skilled labor by automating tasks that such workers would otherwise perform, reducing the demand for their labor. Conversely, these technologies complement high-skilled labor by enhancing the productivity of such workers, increasing the demand for their labor. This dynamic raises the wage rate of high-skilled workers due to increased demand for their enhanced productivity and lowers the wage rate of low-skilled workers due to decreased demand for their replaceable labor.

Question 13

Consider the country of Inland. In Inland, people's average tax rates decrease with the level of income. Inland has a _______ tax structure.

Accepted Answer

A regressive tax structure is characterized by lower tax rates for individuals with higher income levels, which matches the description of the tax system in Inland.

Question 14

The Lorenz curve

Accepted Answer

The Lorenz curve is a graphical representation used to show the distribution of income or wealth within a society, illustrating the degree of income inequality. It does not explain why income differences exist, show the total amount of wealth, or explain income distribution equality.

Question 15

-In the above table, which plan is a flat- rate tax?

Accepted Answer

The answer of 
-In the above table, which plan is...

Question 16

With respect to market and nonmarket production, on average working women are _______ diversified than men and receive _______ pay as a result.

Accepted Answer

On average, working women are more diversified than men in terms of balancing market and nonmarket production (such as household work and caregiving), but they often receive lower pay as a result, reflecting issues like the gender pay gap and undervaluation of nonmarket work.

Question 17

-What type of income tax is reflected in the table above?

Accepted Answer

The answer of 
-What type of income tax is reflected...

Question 18

The "big tradeoff" refers to the tradeoff between

Accepted Answer

The "big tradeoff" refers to the balance between equity (fairness in the distribution of wealth and resources) and efficiency (the optimal allocation of resources to maximize productivity and economic output).

Question 19

In Australia, income is distributed _______ equally than wealth and the Lorenz curve for _______ lies closer to the line of equality.

Accepted Answer

Income is typically distributed more equally than wealth in most economies, including Australia. The Lorenz curve for income, therefore, lies closer to the line of equality than the Lorenz curve for wealth.

Question 20

A progressive income tax is defined as a tax for which

Accepted Answer

A progressive income tax system is characterized by the average tax rate increasing as the level of income increases. This means that individuals with higher incomes pay a larger percentage of their income in taxes compared to those with lower incomes.

Quiz 11: Economic Inequality

In a Lorenz diagram for income, the line of equality shows

The distribution of income in Australia is characterised by the following relationship between the mean, median and mode incomes:

With respect to redistribution, one reason the "big tradeoff" exists is because

Lee earns more than does Pat. Which of the following can explain why?

Wealth differs from income in that

Which of the following will NOT on its own increase a worker's human capital?

If both rich and poor families pay 25 per cent of their income in taxes, the tax scheme is _______.

A firm that discriminates has _ a non- prejudiced firm and _ .

-In the above figure, the straight line between the lower left corner and the upper right corner shows

The Australian Gini ratio for income has _ within recent decades, which means economic inequality has _.

-The above figure shows the Lorenz curves for four different countries. Which country has the most unequal distribution of income?

Computers and laser scanners are ___ for low- skilled labour and _ for high- skilled labour. The introduction of these technologies _ the wage rate of high- skilled workers and ___ The wage rate of low- skilled workers.

Consider the country of Inland. In Inland, people's average tax rates decrease with the level of income. Inland has a _______ tax structure.

The Lorenz curve

-In the above table, which plan is a flat- rate tax?

With respect to market and nonmarket production, on average working women are _ diversified than men and receive _ pay as a result.

-What type of income tax is reflected in the table above?

The "big tradeoff" refers to the tradeoff between

In Australia, income is distributed _ equally than wealth and the Lorenz curve for _ lies closer to the line of equality.

A progressive income tax is defined as a tax for which

Quiz 11: Economic Inequality

In a Lorenz diagram for income, the line of equality shows

The distribution of income in Australia is characterised by the following relationship between the mean, median and mode incomes:

With respect to redistribution, one reason the "big tradeoff" exists is because

Lee earns more than does Pat. Which of the following can explain why?

Wealth differs from income in that

Which of the following will NOT on its own increase a worker's human capital?

If both rich and poor families pay 25 per cent of their income in taxes, the tax scheme is _______.

A firm that discriminates has _______ a non- prejudiced firm and _______ .

-In the above figure, the straight line between the lower left corner and the upper right corner shows

The Australian Gini ratio for income has _______ within recent decades, which means economic inequality has _______.

-The above figure shows the Lorenz curves for four different countries. Which country has the most unequal distribution of income?

Computers and laser scanners are _______ for low- skilled labour and _______ for high- skilled labour. The introduction of these technologies _______ the wage rate of high- skilled workers and _______ The wage rate of low- skilled workers.

Consider the country of Inland. In Inland, people's average tax rates decrease with the level of income. Inland has a _______ tax structure.

The Lorenz curve

-In the above table, which plan is a flat- rate tax?

With respect to market and nonmarket production, on average working women are _______ diversified than men and receive _______ pay as a result.

-What type of income tax is reflected in the table above?

The "big tradeoff" refers to the tradeoff between

In Australia, income is distributed _______ equally than wealth and the Lorenz curve for _______ lies closer to the line of equality.

A progressive income tax is defined as a tax for which

A firm that discriminates has _ a non- prejudiced firm and _ .

The Australian Gini ratio for income has _ within recent decades, which means economic inequality has _.

Computers and laser scanners are ___ for low- skilled labour and _ for high- skilled labour. The introduction of these technologies _ the wage rate of high- skilled workers and ___ The wage rate of low- skilled workers.

With respect to market and nonmarket production, on average working women are _ diversified than men and receive _ pay as a result.

In Australia, income is distributed _ equally than wealth and the Lorenz curve for _ lies closer to the line of equality.