Essay on Econ Prob Set

Submitted By brendasiv
Words: 738
Pages: 3

1a. The right to equal justice, freedom of speech and religion, voting, public education is all examples of how we have rights of Life, Liberty and Pursuit of Happiness. We all have the right to express our opinion in matters that affect us. There is no price that can be set on these rights.
1b. Marketplace set prices on the value of what it offers. We are not entitled to what it offers as we are with the life, liberty and pursuit of happiness. Therefore, in the marketplace, all are not equal in status. Personal beliefs and, to a certain degree, freedom of speech are hindered in the workplace. Your rights in a marketplace depend on the management.
1c. Okun says we accept inequality because it is the price we pay for efficiency. His leaky bucket method says taking from rich to give to poor will reduce total outcome. More equality will lead to less efficiency.
1d. Okun believed that greater equality lead to lower efficiency because equal distribution of income reduced the incentive of the workers to work effectively due to the fact that they would not be able to keep all of their earnings. He assumes that the rich do not work as hard due to inherited wealth, while poor focus on day to day survival.
1e. Okun believed that efficiency was partially a result of income. Someone who did not make as much did not have the same opportunity for investment as someone who had more income. Therefore, the efficiency and drive of the lower paid person would not be as great. More inequality leads to wasteful spending and undermines cooperation and team production. Okun was proven wrong in his beliefs.
1f. Inequality does seem to reduce welfare. Many lower income people do have higher health risks that go uncared for. Life expectancy of lower income people is shorter than those with higher incomes. People with poor health have a negative effect on economic efficiency. If someone is sick, they will either come to work and not produce as much or will call in sick and not produce anything at all. Competitive consumption lowers happiness because of the inequality factor. The “keeping up with the Jones’s” mentality will create unhappiness if that goal cannot be reached or maintained.

2b. In the rap industry, the European Americans who want to be rappers are benefiting. African American rappers are not really benefiting either because of the competition for the job. Discriminating leads to the loss of competitive edge. However, reducing the labor supply by denying other races access also increases the costs by reducing the product available.
2c. As a consumer, I would probably have to pay more for European American rappers music or African American country singers music. Examples can be seen in Eminem and Darius Rucker today. Individuals such as these would gain from this discrimination…