How do preferences and risk contribute to income inequality?
What will be an ideal response?
Some people prefer to work hard on the job and others do not, with the harder working usually earning more income. Some people prefer to work more hours and take less leisure time, and thus they earn a higher income. Individuals also have a different propensity for risk-taking in the type of work they do. Some are willing to take riskier jobs, such as steel workers on high-rise construction sites, and these types of jobs generally pay more than jobs with less risk.
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The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if there were a decrease in her monthly dining out budget?
A) It would bend toward the origin, becoming more convex. B) It would bend away from the origin, becoming more concave. C) It would shift rightward and not change its slope. D) It would shift leftward and not change its slope.
Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will:
A. have a domestic surplus of copper. B. export copper. C. import copper. D. neither export nor import copper.