efficiency and equity Flashcards
what is loss in economy means
potential gains in economy arent captured
why the income distributions of these two countries are different even they have the same Gini coefficient?
the shape of the Lorenz curve can be different
the definitions of income are different between these countrues
why 6000 dollars scheme cannot help improve equity
it does not help equalize opportunities as relative to the rich, the poor do not get more resources to improve their productivity
it cannot equalize income as not everyone can benefit from the scheme
why construction workers have a smaller Gini coefficient than those in business field
This is because the entry to a particular occupation is closely associated with a person’s human capital, which tends to be more homogenous among the construction workers than among finance professionals
Construction workers often paid by time rate while business workers are paid by basic salary plus commission, which may result in a greater diversity of income within this industry.
how distributing money to students in yuen long island districts can improve equity
Equalising income
the districts are with lower average household income so this case will help narrow the income gap
Equalising opportunity
the subsidy on education will enhance the chance of the poor to get higher education without being hindered by their background.
format of answering externality question
2019q4
Getting vaccinated protect oneself as well as lowering the chance of others being infected by the flu
Since the person receiving vaccination is not compensated by others, there exists external benefit, with marginal social benefit exceeding the marginal social cost.
This implies that the number of people getting vaccinated is below the efficient level.
Subsidy can increase the quantity of vaccination towards the efficient level and thus narrow the gap between marginal social benefit and marginal social cost
Factors that lead to income inequality
difference in human capital: Education level
discrimination:
Race
there may be racial discrimination in the job market and some ethics minority groups may suffer a lower wage rate for the same job
Gender
Sex discrimination may exist in the workplace. On average, female suffers a lower wage wage rate for the same rank
Physical attributes
Average income may be higher for the people who are fitter or taller or better looking since these people are more productive for certain jobs
explain the allocative function of money
higher prices would induce producers to direct more resources towards the production of the products with high prices
definition of deadweight loss
Deadweight loss is the loss in the total social surplus or the potential gains not fully captured when marginal benefit does not equal marginal cost.
2013 q18mc
suppose the market equilibrium output level is greater than the efficient output level it implies that
total social surplus will increase if output is reduced towards the efficient output level
the sum of consumer surplus and producer surplus is maximised as the market output level satisfied the equilibrium condition
total social surplus will increase if output is reduced towards the efficient output level
when MSC > MPC
there will be deadweight loss
so the total social surplus must not be maximised
(2013 mc 12 10 8 10 not a must to be equal =.=)
equalising opportunities elaboration
income will not be affected by their ability to afford medical service or their background , but rather by their work effort
department related to equalising opportunity
equal opportunity commission
