What can be said about the overall welfare effects

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Reference no: EM132909088

QUESTION 1 The figure below shows projects r job growth in the US between 2014-2024, in terms of quintiles of the mean annual wage.

a. What does this figure tell us about projected inequality within the US during this period? [max words: 300]

The figure below shows the distribution of income across and within countries in 2014. The height of each bar in the chart varies along two axes. The first axis of variation, from left to right of the figure, is a ranking of countries according to gross domestic income per capita from the poorest on the left, to the richest on the right. The second axis, from the front to the back of the figure, shows the distribution of income from poor to rich within each country.

b. What does this figure tell us about within-country and between-country inequality in 2014? [max words: 300]

c. Are intergenerational inequality and inequality in earnings between members of a population positively or negatively correlated? Give two reasons to justify your answer. [max words: 400]

QUESTION 2

You are now asked to consider a world with two people, Kate and Steve. Steve is a farmer. Kate owns the land on which Steve farms and does not produce any output herself. There is only one good in this world, corn.

a. Use a model of decision making under scarcity to show the allocation that maximises Kate's economic rent when she can coerce Steve. Label all relevant axes, points, and curves, on your model.

b. Use a separate model of decision making under scarcity to show the set of Pareto efficient allocations that result from the introduction of a law that limits Steve's working hours to no more than 15 hours per day. Label all relevant axes, points and curves on your model.

c. Allocations influenced through legislation and other political means will always be Pareto efficient. Do you agree or disagree? Justify your answer. (max words: 2001

QUESTION 3
Suppose that the government of Denmark has decided to increase tax revenue by imposing a tax on the suppliers of beer.

a. Assume the market for beer is perfectly competitive.sing a supply and demand model, show the impact that the tax had on the equilibrium price and quantity of beer sold.

b. Using the diagram created for your answer to (a.), show what effect the tax had on consumer surplus, producer surplus and deadweight loss.

c. What can be said about the overall welfare effects of the Danish Government's tax on beer? Explain your answer. [max words: 200]

Reference no: EM132909088

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