Question 4: (10 pts): Segregation vs. IntegrationConsider a city of 200 people (100 rich and 100 poor) and two neighborhoods (100 people ineach). Both groups generally prefer to live with rich people and are willing to pay a premium forliving with a fraction of rich people that is larger than 50%. Poor people's premium curve isgiven as Ppoor = 16, the premium is constant and independent of the share of rich. Rich people'spremium curve is given by PRich = 0.1x2 where x is the percentage of rich above 50% (e.g., ifthere are 52% rich, x will be 2). Assume the current share of rich people is 65%. What is theequilibrium outcome? Is there more than one equilibrium? Explain.

If more wealthy individuals move into a neighborhood, it could attract even more wealthy…

Answered: Question 4: (10 pts): Segregation vs.…

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter20: Building Theories To Explain Everyday Life: From Observations To Questions To Theories To Predictions

Section: Chapter Questions

Problem 9QP

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Assume for the moment that schools cannot provide edu-cational equality. Analyze the consequences of the persis-tence of educational inequality within the context of the functions of education discussed in the text.
Lawyers for the Brown family used the doll experiments to show that O white children would welcome African American classmates. O African American children had equivalent IQs to white children. O separate but equal policies had no harm on children of either race. segregation had no psychological impact on African American children. O racial segregation had a negative impact on African American children's self-image.
Consider the Lorenz curves for income for Deneb and Elnath as shown in this figure: Lorenz curves for Deneb and Elnath cumullative income share (%) 8 8 2 2 2 2 2 2 2 2 100 90 80 70 60 40 30 Lorenz curve for Elnath 0 0 10 20 30 40 50 60 70 80 90 100 income percentiles Lorenz curve for Deneb [If the image above doesn't appear click here to open it in a new tab.] Which of the following statements is true? [Hint: You do not need to calculate any areas to answer this question correctly!] The relative income inequalities of Deneb and Elnath cannot be determined from the information given. Income inequality is more extreme in Deneb than it is in Elnath. Deneb and Elnath have the same degree of income inequality. Income inequality is more extreme in Elnath than it is in Deneb.
Assume that the current Disability Insurance (DI) benefi t for those whoare unable to work is $X per day and that DI benefi ts go to zero if aworker accepts a job for even 1 hour per week. Suppose that the benefi trules are changed so those disabled workers who take jobs that pay lessthan $X per day receive a benefi t that brings their total daily income(earnings plus the DI benefi t) up to $X. As soon as their labor marketearnings rise above $X per day, their disability benefi ts end. Draw theold and new budget constraints (label each clearly) associated with theDI program, and analyze the work-incentive effects of the change inbenefi ts.
The tax policy is expected to narrow the gap in the income gapPublic. Economic justice is generally reflected in the distribution of existing incomePublic. The ideal of justice is graphically seen in the depiction of the leading Lorenz curveat / near the absolute even distribution line. Based on the principle of morality and especially onthe principle of rationality of good and evil in a more equitable or unequal distribution of incomecan be found.From the above statement, make clear by you the pros and cons of that income distributionmore evenly! Please describe!
2. Suppose there are only two people, Simon and Charity, who must split a fixed income of $100. For Simon, the marginal utility of income is MU, = 400 - 21, whereas for Charity, marginal utility is MU= 400 - 61 where I, I, are the amounts of income to Charity and Simon, respectively. a. What is the optimal distribution of income if the social welfare function is additive? b. What is the optimal distribution if society val- ues only the utility of Charity? What if the reverse is true? Comment on your answers. c. Finally, comment on how your answers change if the marginal utility of income for both Simon and Charity is constant: MU₂ = 400 MU, = 400
Suppose that in the midst of a financial crisis, Mr Burns is forced to sell the SNPP to wealthy chocolate tycoons. The first thing the tycoons do is reverse Mr. Burns’ discriminatory policy against the obese. They eliminate the wage penalty associated with obesity but leave intact the pooled health insurance program, so Homer and Smithers still pay the same premium. a. Now do Homer’s jelly-eating, slothlike habits impose a negative externality on Smithers? Explain the nature of the negative externality. Is there any loss in net social welfare from this externality? Explain why or why not, and describe carefully any assumptions you need to answer this question. b. How might an adverse selection death spiral arise at the new SNPP?
What is the bonding critique of efficiency wage models?
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Which one of the following arguments about the legal consequences of marriage is not one that David Chambers makes: Marriage rules are hardly static and change over time with regard to their benefits and responsibilities. Permitting gay and lesbian couples to adopt children is likely to hinder rather than advance movements for single-parent adoption because it will corrode the myth of two parents needed for child rearing. The legal position for unmarried same sex and opposite sex "step parents" who live with a custodial parent are generally without legal significance. The benefits of marriage are likely to be unevenly distributed among same-sex couples according to social class and income.

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