Explain how the expansion of winner-take-all markets can affect the degree of income inequality
Top performers in these markets reap far greater rewards than do others who are only slightly less
productive. As these markets expand, the income distribution in our economy will become more unequal,
as the rewards for performance become more highly concentrated in the hands of the few.
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Consider the market for cable television, a natural monopoly, shown in the figure above. If the regulator imposes a marginal cost pricing rule, the firm provides service to
A) 3.5 million households. B) 6 million households. C) 10.5 million households. D) 12.5 million households.
A classical IS—LM model of the world economy can be used to show that in a flexible exchange-rate system, a temporary increase in government purchases will cause
A) output and the real interest rate to rise, which reduces net exports but has an ambiguous effect on the real exchange rate. B) output and the real interest rate to rise, which increases net exports but has an ambiguous effect on the real exchange rate. C) output to rise and the real interest rate to fall, which reduces net exports and causes the exchange rate to depreciate. D) the real interest rate to fall, which causes the exchange rate to rise, which reduces net exports.