-The Table Shows the Distribution of Human and Non-Human Capital

question 329

Essay

-The table shows the distribution of human and non-human capital for two people, Sam and Janet.
a) Looking just at tangible assets (non-human capital), by how many times does Janet's wealth exceed Sam's?
b) Assume that both human and non-human capital earn a 10 percent annual interest rate. Calculate Sam's and Janet's total income.
c) By how many times does Janet's total income exceed Sam's?
d) Which comparison results in a more equal distribution?
e) Which comparison gives a better indication of each person's economic condition?

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Definitions:

Dollar-Value LIFO

A variation of the last in, first out (LIFO) method that measures and adjusts inventory layers in terms of dollar value rather than physical count.

Cost Index

A measure that tracks the change over time in the cost of a fixed basket of products and services, typically used for inflation adjustment or to adjust the value of a contract.

Year-End Cost

The total cost of goods, services, or assets as recorded in the financial statements at the end of a company's financial year.

Rising Prices

A scenario where the general level of prices of goods and services in an economy increases over time, often measured by inflation rates.