A Lorenz curve plots the ________.

A. trend in the cumulative percentage of income received by each quintile against the trend in the number of households

B. average income received by each quintile against the number of households in the quintile

C. percentage of total income received by each quintile against the percentage of households in the quintile

D. cumulative percentage of income against the cumulative percentage of households

In recent years, as the gap between the rich and the poor has increased, the Lorenz curve has ________.

A. shifted away from the line of equality

B. not changed, but there has been a movement down along it

C. shifted closer to the line of equality

D. not changed, but there has been a movement up along it

A union will ________ if it can ________.

A. raise the wage rate of its members; decrease the marginal product of its union members

B. raise the wage rate of its members; introduce minimum qualifications, which will restrict membership of the union

C. increase the number of union jobs; restrict membership of the union

D. increase the number of union jobs; increase the union wage rate

An individual’s supply of labor curve is ________. A. horizontal at the market wage rate B. upward sloping as the wage rate rises C. upward sloping at low wage rates but becomes downward sloping at high wage rates D. vertical at the standard number of hours a person works per day

An individual’s supply of labor curve is ________.

A. horizontal at the market wage rate

B. upward sloping as the wage rate rises

C. upward sloping at low wage rates but becomes downward sloping at high wage rates

D. vertical at the standard number of hours a person works per day

To maximize profit, a firm ________.

A. uses the quantity of land at which the rental rate equals the value of marginal product of land

B. balances the rental rate of capital against the wage rate of labor

C. uses the quantity of capital at which the marginal revenue equals the value of marginal product of capital

D. uses the quantity of capital at which the suppliers’ expected profit equals the value of marginal product of capital

In a competitive labor market for bakers, the equilibrium wage rate ________. A. rises if bakers become more productive B. falls if the supply of bakers decreases C. rises if the market price of bakery items falls D. rises if new technology makes it easier for anyone to be a baker

In the prisoners’ dilemma game, each player ________.

A. consults the other player to determine his best action B. chooses the best outcome for the other player C. chooses the best outcome for himself D. chooses the best outcome for both players together

Suppose that a society contains only two members, a lawyer named Monique and a handyman named James. Five years ago, Monique made $100,000 while James made$50,000. This year, Monique will make $300,000 while James will make$100,000. Which of the following statements about this society’s income distribution are true?

Assume that Al, Beth, Carol, David, and Ed receive incomes of $500,$250, $125,$75, and $50, respectively. Construct and interpret a Lorenz curve for this five-person economy. What percentage of total income is received by the richest quintile and by the poorest quintile?

Read Eye on Smartphones on p. 451 and explain why smartphone producers offer such a large variety of their products. Draw a graph of a firm’s cost and revenue curves if all smartphones are identical. Use your graph to illustrate the effects of the firm introducing a new, differentiated smartphone.

Assume that $\mathrm{Al}$, Beth, Carol, David, and Ed receive incomes of $\$ 500, \$ 250, \$ 125, \$ 75$, and $\$ 50$, respectively. Construct and interpret a Lorenz curve for this fiveperson cconomy. What percentages of total income are received by the richest quintile and by the poorest quintile?

Explain how the Bureau of Labor Statistics expects the market for coders to change in the future and draw a graph to show the expected changes.

Which influence adds more, on average, to a household’s income: getting a professional degree, getting married, getting older, or moving to California? Which of these influences, on average, adds least?