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8 Cards in this Set

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1. The wage differential between high-skilled and low-skilled workers is the rest of
A. A difference in the value of marginal product.
B. The cost of acquiring skills.
C. A Negative income tax.
D. Both answers A and B are correct.
E. Both answers B and C are correct.
D. Both answers A and B are correct.
2. Discrimination
A. Can be corrected by imposing a negative income tax.
B. Cannot explain economic inequality.
C. Immediately results in an unequal ownership of capital.
D. Is more likely to occur in a business where customers come into contact with minority employees.
E. Means that the costs paid by people who discriminate are lower than otherwise.
D. is more likely to occur in a business where customers come into contact with minority employees.
3. Which of the following statements correctly describes how taxes redistribute income across different households in an economy?
A. The richest 40 percent of households increase their share of income.
B. The poorest 60 percent of households increase their share of income.
C. A negative income tax operates like a progressive income tax on the rich.
D. The poorest 20 percent of households receive 20 percent of their income from the government.
E. The richest 20 percent of households increase their share of income and the poorest 20 percent decrease their share of income.
B. The poorest 60 percent of households increase their share of income.
4. Suppose a state charges an in-state student $2000 in tuition for college education and charges an out-of-state student $10,000 in tuition. This differential
A. Is a result of the state subsidizing education for its residents.
B. Explains the difference between the demand curve for high-skilled and low-skilled labor.
C. Explains the difference between the supply curve for high-skilled and low-skilled labor.
D. Can be corrected via a negative income tax.
E. Is an example of the positive theories of income redistribution.
A. Is a result of the state subsidizing education for its residents.
5. The difference between money income and market income is due to
A. A negative income tax.
B. The value of marginal product of skill.
C. The fact that market income equals money income minus the taxes imposed by the government.
D. Nothing because there is no difference.
E. The fact that money income equals market income plus money benefits paid by the government.
E. The fact that money income equals market income plus money benefits paid by the government.
6 (Really 12). One reason why economists earn more than Taco Bell workers is because economists have a ____ value of marginal produce when compared to Taco Bell workers.
A. Lower
B. Higher
C. Similar
D. Convex
E. Concave
B. Higher
7. The gap between the salary of Tom Cruise and an unknown actor is over $15 million per movie. This difference means that Mr. Cruise's value of marginal product is
A. Over $15 million greater than the value of the marginal product of the unknown actor.
B. Less than $15 million greater than the value of marginal product of the unknown actor.
C. $15 million greater than the value of the marginal product of the unknown actor.
D. Equal to the value of the marginal product of the unknown actor.
E. More information is needed to make the comparison.
A. Is over $15 million greater than the value of the marginal product of the unknown actor.
8. Which of the following is true?
At a given quantity of employment, if the
i. value of the marginal product of a high skill worker is $35 and the value of the marginal product of a low-skill worker is $10, the marginal product of the skill is $25.
ii. value of the marginal product of a high-skill worker is $35 and the value of the marginal product of a low-skill worker is $10, the cost of acquiring the skill is $25.
iii. value of the marginal product of a skill is $25, then the wage rate must be $25.
A. i only.
B. ii only.
C. iii only.
D. i and iii.
E. ii and iii.
A. i only.