Let's say that an economy consists of 4 workers, whose incomes in year 1 respectively are:...

Transcribed Image Text:

Let's say that an economy consists of 4 workers, whose incomes in year 1 respectively are: $10,000, $20,000, $30,000, and $40,000. This means that the average income is $25,000. In year 2, the worker with the highest income ($40,000) retires and leaves the work force. A new, younger, worker enters the workforce and gets a starting salary of $5,000. The other 3 workers are earning $5,000 more each in year 2, so that the 4 workers' incomes are now: $5,000, $15,000, $25,000, and $35,000. The average income in year 2 is now $20,000. As you can see, the average income from year 1 to year 2 has declined. Some economists conclude from this that average workers are worse off in year 2 compared to year 1. As a critically thinking economist you realize that this is an example where you must question: O the statistics O the consumptions O the variability of the study O the way the variables are defined € Let's say that an economy consists of 4 workers, whose incomes in year 1 respectively are: $10,000, $20,000, $30,000, and $40,000. This means that the average income is $25,000. In year 2, the worker with the highest income ($40,000) retires and leaves the work force. A new, younger, worker enters the workforce and gets a starting salary of $5,000. The other 3 workers are earning $5,000 more each in year 2, so that the 4 workers' incomes are now: $5,000, $15,000, $25,000, and $35,000. The average income in year 2 is now $20,000. As you can see, the average income from year 1 to year 2 has declined. Some economists conclude from this that average workers are worse off in year 2 compared to year 1. As a critically thinking economist you realize that this is an example where you must question: O the statistics O the consumptions O the variability of the study O the way the variables are defined €

Answer rating: 100% (QA)

The detailed answer for the above question is provided b... View the full answer