How has income inequality changed in recent years? What factors ...

[Chloeellawright]

How has income inequality changed in recent years? What factors account for the changes?
 
  What will be an ideal response?

Question 2

As Jake consumes more sodas over the course of a day, it is likely that his marginal rate of substitution of sodas for other goods will rise. Is the previous statement correct or incorrect?
 
  What will be an ideal response?

[aruss1303]

Answer to Question 1

Over the last couple of decades, income inequality has increased. In recent years, higher income groups have gained relatively more than the lower income groups, perhaps because of rapid technological progress. These technological advances have benefited the better educated more than the less educated.

Answer to Question 2

The statement is incorrect. The principle of diminishing marginal rate of substitution means that as Jake consumes more sodas, he is willing to give up fewer other goods in order to get an additional soda.