Suppose All Persons Have the Same Innate Ability and the Same

question 42

Multiple Choice

Suppose all persons have the same innate ability and the same access to capital markets.Which of the following will decrease inequality?

• A) People vary more in their time horizon.
• B) People vary more in the value they place on leisure.
• C) People become more willing to leave the labor force when their wages fall.
• D) People become more risk-averse.

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Definitions:

Lost Revenues

Earnings that a company misses out on due to factors such as inventory shortages, machine downtime, or market conditions.

Terms: 3/20, Net 30

Payment terms indicating a 3% discount if paid within 20 days, otherwise net amount is due within 30 days.

June 1 Dating

A term used in trade credit to indicate that the payment is due on June 1 for purchases made now.

Lockbox System

A service provided by banks to companies for the receipt of payment from customers, involving collecting and processing checks received at a special post office box.