Session:15 Poverty and Economic Inequality
Problems
Principles of Microeconomics 3e | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-microeconomics-3e
44. In country A, the population is 300 million and 50 million people are living below the poverty line. What is
the poverty rate?
45. In country B, the population is 900 million and 100 million people are living below the poverty line. What
is the poverty rate?
46. Susan is a single mother with three children. She can earn $8 per hour and works up to 1,800 hours per
year. However, if she does not earn any income at all, she will receive government benefits totaling
$16,000 per year. For every $1 of income she earns, her level of government support will be reduced by
$1. Create a table, patterned after this one. The first column should show Susan’s choices of how many
hours to work per year, up to 1,800 hours. The second column should show her earnings from work. The
third column should show her level of government support, given her earnings. The final column should
show her total income, combining earnings and government support. Based on the table you created, what
are the likely impacts of this kind of assistance program on Susan’s incentive to work? Are there
additional opportunity costs that may reduce her incentive to work?
47. A group of 10 people have the following annual incomes: $55,000, $30,000, $15,000, $20,000, $35,000,
$80,000, $40,000, $45,000, $30,000, $50,000. Calculate the share of total income each quintile of this
income distribution received. Do the top and bottom quintiles in this distribution have a greater or larger
share of total income than the top and bottom quintiles of the U.S. income distribution for 2005?
the poverty rate?
45. In country B, the population is 900 million and 100 million people are living below the poverty line. What
is the poverty rate?
46. Susan is a single mother with three children. She can earn $8 per hour and works up to 1,800 hours per
year. However, if she does not earn any income at all, she will receive government benefits totaling
$16,000 per year. For every $1 of income she earns, her level of government support will be reduced by
$1. Create a table, patterned after this one. The first column should show Susan’s choices of how many
hours to work per year, up to 1,800 hours. The second column should show her earnings from work. The
third column should show her level of government support, given her earnings. The final column should
show her total income, combining earnings and government support. Based on the table you created, what
are the likely impacts of this kind of assistance program on Susan’s incentive to work? Are there
additional opportunity costs that may reduce her incentive to work?
47. A group of 10 people have the following annual incomes: $55,000, $30,000, $15,000, $20,000, $35,000,
$80,000, $40,000, $45,000, $30,000, $50,000. Calculate the share of total income each quintile of this
income distribution received. Do the top and bottom quintiles in this distribution have a greater or larger
share of total income than the top and bottom quintiles of the U.S. income distribution for 2005?