Which of the Following Will Reduce Inequality

question 53

Multiple Choice

Which of the following will reduce inequality?

• A) The rich and poor earn more, but the rich earn proportionately more.
• B) The poor and rich earn less, but the earnings of the rich go down proportionately more.
• C) The poor and the rich earn proportionately more.
• D) The poor and rich earn less, but the earnings of the poor go down proportionately more.

Recognize the allocation efficiency in pure competition where production occurs at the output level where P = MC.

Comprehend the differences between short-run and long-run supply curves in purely competitive industries.

Describe the effect of new firms entering or existing firms leaving a purely competitive market on market supply and equilibrium.

Define productive efficiency and its relation to marginal cost and marginal revenue.

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Definitions:

Production Cost

The total expense incurred in manufacturing a product, including materials, labor, and overhead.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead in the cost of a product.

Variable Costing

Variable costing is an accounting method that only considers variable costs, which change with production levels, in the cost of goods sold and excludes fixed manufacturing overhead.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a period of time.