Income redistribution in the United States results in the income share of the ________ rising and the income share of the ________ falling.

A. lowest quintile; other four quintiles

B. two lowest quintiles; other three quintiles

C. three lowest quintiles; other two quintiles

D. four lowest quintiles; highest quintile

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

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

Which of the following statements about a nonrenewable natural resource market is incorrect?

A. The demand for the resource is determined by its value of marginal product.

B. The supply of the resource is perfectly elastic at the market price.

C. The price of the resource is expected to rise over time at a rate equal to the interest rate.

D. The supply of the resource is perfectly inelastic.

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

Which of the following statements is correct?

A. The closer the Lorenz curve is to the line of equality, the more unequal is the distribution of income.

B. The farther the Lorenz curve is from the line of equality, the more unequal is the distribution of income.

C. If the Lorenz curve crosses the line of equality the distribution of income is more unequal at high income levels than at low income levels.

D. The Lorenz curve for wealth is closer to the line of equality than the Lorenz curve for income

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

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

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

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.

A new coffee shop opens and to maximize profit it hires 5 workers at the competitive wage rate. The price of a cup of coffee is $4 and the value of marginal product of workers in the coffee shop is$12 an hour.

If the price of a cup of coffee rises from $4 to$5 and the coffee shop continues to hire workers at the competitive wage rate, explain how the value of marginal product and the number of workers hired will change.

Each of the following practices violates U.S. antitrust law except ________.

A. an agreement to sell one good only if the buyer purchases another good

B. an agreement between the manufacturer and the seller to charge a given price for the good

C. starting a price war with other sellers of a similar good

D. cutting the price to increase market share to 100 percent, then raising the price

Which of the following statements is incorrect. In oligopoly, ________.

A. barriers to entry prevent new firms entering

B. each firm’s profit is influenced by each other firms’ advertising

C. each firm’s action is influenced by the actions and reactions of each other firm

D. each firm is a price taker and the price is the monopoly profit-maximizing price

Use the following information to work Problems 5 and 6. In a year, 130,000 aircraft mechanics and service technicians earned an average of $20 an hour whereas 30,000 elevator installers and repairers earned an average of$25 an hour. The skill and training for these two jobs are very similar.

Suppose that a government law required both groups of workers to be paid $22.50 an hour. Draw a graph to illustrate what would happen to the quantities employed of the two types of labor.