a) The Hassett (2006) article discusses gift giving during the holidays. How is receiving a Christmas (or other holiday) gift similar to receiving food stamps? Why might an economist argue that both are inefficient?

b) The Siegel and Van Dam (2022) article cites to research that shows that "by the second half of 2021, households earning less than $30,000 a year consistently faced higher inflation than those earning more than $100,000 a year." Using real incomes, which are incomes adjusted for inflation, to perform the computation, how would you have expected this development to affect the U.S. Gini coefficient?

c) In discussing racism in U.S. corporations, the Economist (2020) article notes, "A related argument offered by some for corporate inaction maintains that if there is a race problem facing American business, market forces should be able to solve it." Explain how "market forces" could, at least in theory, work to help eliminate racial discrimination in firms. Discuss limitations of this argument and why the senior executive of the consulting firm highlighted in the article "rejects this argument."

2) Some people lament the fact that professional athletes get paid millions but teachers, who arguably have a much more important role in society, get paid much less. From the perspective of economic theory, how do you explain this perceived inconsistency?

3) Assume you are interested in income inequality and poverty in two local communities and so gather the following data: % of Households Community A Average Income Community B Average Income Bottom 25% $20,000 $30,000 Second 25% $40,000 $70,000 Third 25% $60,000 $100,000 Fourth 25% $80,000 $200,000 a) Use the data to draw Lorenz curves for both communities. You can include both curves on the same graph. b) Which community has greater inequality? Why? c) Which community is likely to have greater poverty? Why?

4) When Alan Greenspan (who would later become chair of the Federal Reserve) ran an economic consulting firm in the 1960s, he primarily hired female economists. He once told The New York Times, "I always valued men and women equally, and I found that because others did not, good women economists were cheaper than men." Is Greenspan's behavior profit maximizing? If more employers were like Greenspan, what would happen to the wage differential between men and women? Why might other economic consulting firms at the time not have followed Greenspan's business strategy

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Answer Receiving a Christmas or holiday gift can be similar to receiving food stamps in the sense that both provide resources or goods to individuals that they may not have otherwise obtained However ... View the full answer