Question 1

The vertical distance between the two supply curves in Figure 19.3.1

Accepted Answer

A) is the compensation for the cost of acquiring human capital. 
B) is the VMP of skill. 
C) is the result of discrimination against low-skilled workers. 
D) is the result of subsidies for high-skilled workers. 
E) will disappear if there is free entry in the high-skilled market. 
A) is the compensation for the cost of acquiring human capital. 
B) is the VMP of skill. 
C) is the result of discrimination against low-skilled workers. 
D) is the result of subsidies for high-skilled workers. 
E) will disappear if there is free entry in the high-skilled market. A

Question 2

Refer to the table below to answer the following questions.
Table 19.4.2
 $$\begin{array} { c c c c } 
\hline \begin{array} { c } 
\text { Before -tax } \
\text { income } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Plan A tax } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Plan B tax } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Plan C tax } \
\text { (dollars) }
\end{array} \
\hline \mathbf { 1 0 , 0 0 0 } & 1,000 & 1,000 & 2,000 \
\mathbf { 2 0 , 0 0 0 } & 2,000 & 4,000 & 2,000 \
\mathbf { 3 0 , 0 0 0 } & 3,000 & 9,000 & 2,000 \
\hline
\end{array}$$
-Refer to Table 19.4.2.The table shows three tax payment schemes.Which tax payment plan reduces inequality?

Accepted Answer

A) Plan A 
B) Plan A and Plan C 
C) Plan C 
D) Plan B 
E) Plan A,Plan B,and Plan C 
A) Plan A 
B) Plan A and Plan C 
C) Plan C 
D) Plan B 
E) Plan A,Plan B,and Plan C D

Question 3

Use the figure below to answer the following question.
   Figure 19.3.3
-Refer to Figure 19.3.3.At any given level of employment for high-skilled and low-skilled workers,the vertical distance between the two supply curves

Accepted Answer

A) disappears if there is free entry into the skill market. 
B) disappears if there is equal pay for work of equal value. 
C) is created by discrimination against low-skilled workers. 
D) is the compensation required for the cost of acquiring human capital. 
E) equals the value of marginal product of skill. 
A) disappears if there is free entry into the skill market. 
B) disappears if there is equal pay for work of equal value. 
C) is created by discrimination against low-skilled workers. 
D) is the compensation required for the cost of acquiring human capital. 
E) equals the value of marginal product of skill. D

Question 4

Use the figure below to answer the following questions.
   Figure 19.1.3
-In Figure 19.1.3,the poorest 20 percent of all families receive what share of income?

Accepted Answer

A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) none of the above 
A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) none of the above

Question 5

Last year you earned $45,000 and paid $9,000 in income taxes.This year you earned $60,000 and paid $15,000 in income taxes.What type of income tax do you face?

Accepted Answer

A) regressive 
B) proportional 
C) progressive 
D) flat 
E) Both B and D are correct. 
A) regressive 
B) proportional 
C) progressive 
D) flat 
E) Both B and D are correct.

Question 6

The distribution of world income is ________ the distribution of Canadian income.

Accepted Answer

A) more equal than 
B) equal to 
C) not comparable to 
D) equal to the distribution of Canadian wealth and more equal than 
E) less equal than 
A) more equal than 
B) equal to 
C) not comparable to 
D) equal to the distribution of Canadian wealth and more equal than 
E) less equal than

Question 7

Complete the following sentence.Passing on wealth from one generation to another

Accepted Answer

A) can decrease the inequality of wealth. 
B) will decrease the inequality of income. 
C) is limited since the government taxes this at a very high marginal tax rate. 
D) is one of the main causes of social unrest. 
E) will make the distribution of wealth more closely match the distribution of human capital. 
A) can decrease the inequality of wealth. 
B) will decrease the inequality of income. 
C) is limited since the government taxes this at a very high marginal tax rate. 
D) is one of the main causes of social unrest. 
E) will make the distribution of wealth more closely match the distribution of human capital.

Question 8

A firm that discriminates has ________ a firm that does not discriminate and ________.

Accepted Answer

A) the same costs as;competes most often with firms from other countries 
B) the same costs as;can successfully maximize profit in a competitive industry 
C) lower costs than;drives other firms out of a competitive industry 
D) higher costs than;competes most often with firms from other countries 
E) higher costs than;cannot survive in a competitive industry 
A) the same costs as;competes most often with firms from other countries 
B) the same costs as;can successfully maximize profit in a competitive industry 
C) lower costs than;drives other firms out of a competitive industry 
D) higher costs than;competes most often with firms from other countries 
E) higher costs than;cannot survive in a competitive industry

Question 9

Use the figure below to answer the following questions.
   Figure 19.3.2
-Refer to Figure 19.3.2.At an employment level of 40 hours per week,the difference in the value of marginal product of high-skilled workers and low-skilled workers is

Accepted Answer

A) $0. 
B) $2 an hour. 
C) $6 an hour. 
D) $4 an hour. 
E) $3 an hour. 
A) $0. 
B) $2 an hour. 
C) $6 an hour. 
D) $4 an hour. 
E) $3 an hour.

Question 10

Use the figure below to answer the following questions.
   Figure 19.3.1
-Refer to Figure 19.2.1.For any given quantity of labour employed,

Accepted Answer

A) the elasticity of demand for high-skilled labourers is less than the elasticity of demand for low-skilled labourers. 
B) high-skilled labourers will receive a lower wage than low-skilled labourers. 
C) high-skilled labourers will receive a greater wage than low-skilled labourers. 
D) the vertical distance between the two demand curves is the compensation for the cost of acquiring the skill. 
E) the vertical distance between the two curves is the present value of human capital. 
A) the elasticity of demand for high-skilled labourers is less than the elasticity of demand for low-skilled labourers. 
B) high-skilled labourers will receive a lower wage than low-skilled labourers. 
C) high-skilled labourers will receive a greater wage than low-skilled labourers. 
D) the vertical distance between the two demand curves is the compensation for the cost of acquiring the skill. 
E) the vertical distance between the two curves is the present value of human capital.

Question 11

Which point in Figure 19.1.2 indicates that the richest 20 percent of families earn 40 percent of the income?

Accepted Answer

A) a 
B) b 
C) c 
D) d 
E) none of the above 
A) a 
B) b 
C) c 
D) d 
E) none of the above

Question 12

Use the figure below to answer the following questions.
   Figure 19.1.3
-In Figure 19.1.3,the middle 20 percent of all families receive what share of income?

Accepted Answer

A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) none of the above 
A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) none of the above

Question 13

In 2009,what percentage of households received the mode income in Canada?

Accepted Answer

A) 5 percent 
B) 10 percent 
C) 7 percent 
D) 17.4 percent 
E) 20 percent 
A) 5 percent 
B) 10 percent 
C) 7 percent 
D) 17.4 percent 
E) 20 percent

Question 14

Use the figure below to answer the following questions.
   Figure 19.1.1
-Refer to Figure 19.11.The middle 20 percent of households receive what share of total income?

Accepted Answer

A) 20 percent 
B) 25 percent 
C) 35 percent 
D) 15 percent 
E) 60 percent 
A) 20 percent 
B) 25 percent 
C) 35 percent 
D) 15 percent 
E) 60 percent

Question 15

A progressive income tax

Accepted Answer

A) taxes lower income people a larger percentage than higher income people. 
B) taxes income at an average rate that increases with income. 
C) receives more tax from rich people,but taxes them at the same rate as poor people. 
D) taxes everyone at the same rate. 
E) is rarely used in advanced economies. 
A) taxes lower income people a larger percentage than higher income people. 
B) taxes income at an average rate that increases with income. 
C) receives more tax from rich people,but taxes them at the same rate as poor people. 
D) taxes everyone at the same rate. 
E) is rarely used in advanced economies.

Question 16

The three main avenues through which the government redistributes income are

Accepted Answer

A) subsidized services,sales taxes,and user fees. 
B) sales taxes,income maintenance programs,and income taxes. 
C) income maintenance programs,user fees,and welfare programs. 
D) subsidized services,income taxes,and income maintenance programs. 
E) welfare programs,income taxes,and income maintenance programs. 
A) subsidized services,sales taxes,and user fees. 
B) sales taxes,income maintenance programs,and income taxes. 
C) income maintenance programs,user fees,and welfare programs. 
D) subsidized services,income taxes,and income maintenance programs. 
E) welfare programs,income taxes,and income maintenance programs.

Question 17

A welfare trap occurs when the marginal tax rate is

Accepted Answer

A) negative. 
B) zero. 
C) 100% or more. 
D) positive. 
E) less than the average tax rate. 
A) negative. 
B) zero. 
C) 100% or more. 
D) positive. 
E) less than the average tax rate.

Question 18

Use the figure below to answer the following questions.
   Figure 19.3.2
-Refer to Figure 19.3.2.For the employer to hire 40 hours per week of both high-skilled and low-skilled labour,

Accepted Answer

A) high-skilled workers would have to earn a wage rate that is twice that of the low-skilled workers. 
B) high-skilled workers would have to earn a wage rate that is less than that of the low-skilled workers. 
C) high-skilled workers would have to earn a wage that is $2 more than the wage paid to low-skilled workers. 
D) low-skilled workers would have to earn a wage that is $2 more than the wage paid to high-skilled workers. 
E) high-skilled workers need to earn a wage that is between zero and $2 more than low-skilled workers. 
A) high-skilled workers would have to earn a wage rate that is twice that of the low-skilled workers. 
B) high-skilled workers would have to earn a wage rate that is less than that of the low-skilled workers. 
C) high-skilled workers would have to earn a wage that is $2 more than the wage paid to low-skilled workers. 
D) low-skilled workers would have to earn a wage that is $2 more than the wage paid to high-skilled workers. 
E) high-skilled workers need to earn a wage that is between zero and $2 more than low-skilled workers.

Question 19

Use the figure below to answer the following questions.
   Figure 19.1.3
-The curve in Figure 19.1.3 is the

Accepted Answer

A) line of fairness. 
B) line of equality. 
C) learning curve. 
D) wage differential curve. 
E) Lorenz curve. 
A) line of fairness. 
B) line of equality. 
C) learning curve. 
D) wage differential curve. 
E) Lorenz curve.

Question 20

Technological change ________ the demand for high-skilled workers and ________ the demand for low-skilled workers.As a result,income inequality ________.

Accepted Answer

A) increases;decreases;decreases 
B) increases;decreases;increases 
C) increases;increases;decreases 
D) decreases;decreases;increases 
E) increases;does not change;increases 
A) increases;decreases;decreases 
B) increases;decreases;increases 
C) increases;increases;decreases 
D) decreases;decreases;increases 
E) increases;does not change;increases

The vertical distance between the two supply curves in Figure 19.3.1

Use the figure below to answer the following question. Figure 19.3.3 -Refer to Figure 19.3.3.At any given level of employment for high-skilled and low-skilled workers,the vertical distance between the two supply curves

Use the figure below to answer the following questions. Figure 19.1.3 -In Figure 19.1.3,the poorest 20 percent of all families receive what share of income?

Last year you earned $45,000 and paid $9,000 in income taxes.This year you earned $60,000 and paid $15,000 in income taxes.What type of income tax do you face?

The distribution of world income is ________ the distribution of Canadian income.

Complete the following sentence.Passing on wealth from one generation to another

A firm that discriminates has a firm that does not discriminate and .

Use the figure below to answer the following questions. Figure 19.3.2 -Refer to Figure 19.3.2.At an employment level of 40 hours per week,the difference in the value of marginal product of high-skilled workers and low-skilled workers is

Use the figure below to answer the following questions. Figure 19.3.1 -Refer to Figure 19.2.1.For any given quantity of labour employed,

Which point in Figure 19.1.2 indicates that the richest 20 percent of families earn 40 percent of the income?

Use the figure below to answer the following questions. Figure 19.1.3 -In Figure 19.1.3,the middle 20 percent of all families receive what share of income?

In 2009,what percentage of households received the mode income in Canada?

Use the figure below to answer the following questions. Figure 19.1.1 -Refer to Figure 19.11.The middle 20 percent of households receive what share of total income?

A progressive income tax

The three main avenues through which the government redistributes income are

A welfare trap occurs when the marginal tax rate is

Use the figure below to answer the following questions. Figure 19.3.2 -Refer to Figure 19.3.2.For the employer to hire 40 hours per week of both high-skilled and low-skilled labour,

Use the figure below to answer the following questions. Figure 19.1.3 -The curve in Figure 19.1.3 is the

Technological change the demand for high-skilled workers and the demand for low-skilled workers.As a result,income inequality .

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities,preferences,and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 19: Economic Inequality

The vertical distance between the two supply curves in Figure 19.3.1

Use the figure below to answer the following question. Figure 19.3.3 -Refer to Figure 19.3.3.At any given level of employment for high-skilled and low-skilled workers,the vertical distance between the two supply curves

Use the figure below to answer the following questions. Figure 19.1.3 -In Figure 19.1.3,the poorest 20 percent of all families receive what share of income?

Last year you earned $45,000 and paid $9,000 in income taxes.This year you earned $60,000 and paid $15,000 in income taxes.What type of income tax do you face?

The distribution of world income is ________ the distribution of Canadian income.

Complete the following sentence.Passing on wealth from one generation to another

A firm that discriminates has ________ a firm that does not discriminate and ________.

Use the figure below to answer the following questions. Figure 19.3.2 -Refer to Figure 19.3.2.At an employment level of 40 hours per week,the difference in the value of marginal product of high-skilled workers and low-skilled workers is

Use the figure below to answer the following questions. Figure 19.3.1 -Refer to Figure 19.2.1.For any given quantity of labour employed,

Which point in Figure 19.1.2 indicates that the richest 20 percent of families earn 40 percent of the income?

Use the figure below to answer the following questions. Figure 19.1.3 -In Figure 19.1.3,the middle 20 percent of all families receive what share of income?

In 2009,what percentage of households received the mode income in Canada?

Use the figure below to answer the following questions. Figure 19.1.1 -Refer to Figure 19.11.The middle 20 percent of households receive what share of total income?

A progressive income tax

The three main avenues through which the government redistributes income are

A welfare trap occurs when the marginal tax rate is

Use the figure below to answer the following questions. Figure 19.3.2 -Refer to Figure 19.3.2.For the employer to hire 40 hours per week of both high-skilled and low-skilled labour,

Use the figure below to answer the following questions. Figure 19.1.3 -The curve in Figure 19.1.3 is the

Technological change ________ the demand for high-skilled workers and ________ the demand for low-skilled workers.As a result,income inequality ________.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities,preferences,and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

A firm that discriminates has a firm that does not discriminate and .

Technological change the demand for high-skilled workers and the demand for low-skilled workers.As a result,income inequality .