Some people think it's unfair that celebrities like Kim ...

[CBme]

Some people think it's unfair that celebrities like Kim Kardashian earn a lot more than people who add so much more value to society, like teachers. What do you think explains this wage differential?
 
  What will be an ideal response?

Question 2

How does the owner of a sole proprietorship relate to the business?
 
  A) The assets of the owner are considered separate from the assets of the business.
  B) The owner and the business are not separate legal entities.
  C) The owner and the business are separate legal entities.
  D) None of these describe the legal relationship of the owner to the business.

[wuly]

Answer to Question 1

The wages that are paid to celebrities and teachers will depend on each person's ability to produce labor of economic value. Compared to say, teachers, celebrities like Kim Kardashian add a great deal more economic value to the firms that hire them. The fact that the ad revenue and other earnings that they generate are so high could explain their relatively higher wages. Keep in mind that even though teachers are likely to be more important to society than a celebrity, there are far more teachers than celebrities, who are in extremely limited supply. At the margin, the last teacher hired adds less to output than does Kim Kardashian, as measured by her contribution to total revenue.

Answer to Question 2

B