CHAPTER 18
1.1 Items (d) and (e) represent income from wages and salaries.
2.1 The Gini coefficient for right-handed people exceeds that for left-handed people. The Gini
2.2 (a) The distribution of income was more equal in 2015 because the Lorenz curve for 2015 is
(b) Since the area of the entire box is 100 x 100 = 10, 000, the area beneath the 45-degree
2.3
Person
Annual
Income
Share Of
Income Cumulative Share of Income
Victori
a
$16,000 4% 4%
s
303
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Solutions to Problems 304
3.1 Answers will vary based on companies chosen. Some companies may choose to reimburse
3.2 Capital is an input into the production process that is produced and produces benefits over time.
3.3 Radio broadcasting requires much skill and training. Those who get such jobs have a great deal of
3.4 Disagree. The statement ignores different working conditions, different vacation allowances, and
3.5 Answers will vary. Cost-of-living differences would imply that they should be different. The
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Solutions to Problems 305
3.6 Answers will vary, but should include discussion of income inequality and income distribution.
4.1 If labor markets work the way the competitive ideal suggests, pay is linked to productivity. Recall
On the other hand, discrimination by race or gender may crowd certain occupations or result in
5.1 Social Security, Medicare, private pensions, and the availability of secure vehicles for saving
5.2 Answers will vary, but include welfare programs, job training programs, universal health care,
5.3 Unemployment compensation reduces the opportunity cost of looking for work, so those people
6.1 Answers will vary, but may include the following ideas: The poverty line is based on the cost of
the Department of Agriculture’s minimum food budget. The cost of living, including the cost of
7.1 If we assume that most people work a 40-hour week and 52 weeks per year, at $7.25 an hour,
7.2 If the minimum wage was set at $32.00 per hour in this market, fewer jobs would be available
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Solutions to Problems 306
8.1 Answers will vary based on the state of residence of the student. Residents of some states are
9.1 For Australia and Japan, The average annual percentage increase in income was larger for the top
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