1. How has the distribution of income in the United States changed between 1929

Question

1. How has the distribution of income in the United States changed between 1929 and the present? A) Year after year, the distribution of income has generally become more equal. B) Year after year, the distribution of income has generally become more unequal. C) The distribution of income generally became more equal until about 1979 and then generally became more unequal. D) The distribution of income generally became more unequal until about 1979 and then generally became more equal.

2 Firms in monopolistic competition always will A) earn an economic profit. B) set their price equal to their marginal cost. C) set their price above their marginal cost. D) produce at the minimum average total cost.

3. The technology used to manufacture computer memory chips advances. As a result, the price of a memory chip ____ and the quantity of memory chips ____. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases

4. Tablets are a normal good and people’s incomes increase. As a result, the equilibrium price of a tablet ____ and the quantity ____. A) rises; increases B) rises; decreases C) falls; decreases D) falls; increases E) does not change; increases More people become convinced that wearing cotton clothing is stylish.

5. At the same time, the number of firms producing cotton clothing increases. As a result, the equilibrium price of cotton clothing ____ and the equilibrium quantity ____. A) rises; increases B) falls; decreases C) might rise, fall, or not change; increases D) rises; might increase, decrease, or not change E) None of the above answers are correct.

6. For a single-price monopolist that is maximizing profit, the price is A) less than marginal revenue. B) equal to marginal revenue. C) equal to marginal cost. D) greater than marginal cost.

Explanation / Answer

1) C is correct

Income equality was stable till around 1979 and then income inequality started increasing.

2) c is correct

In monopolistic competition P>MC as all firms sell differentiated products which give them certain market power.

3) c is correct

With technology improvement cost of production falls which leads to increase in supply. This results higher quantity at lower prices.

4) A is correct

Demand for tablets increases with increase in income. This results in higher quantity sold at higher price.

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