Author Question: If income is equally distributed, the Gini ratio is 1. Indicate whether the statement is true or ... (Read 78 times)

tingc95 · **on:** Jun 29, 2018

If income is equally distributed, the Gini ratio is 1.

Indicate whether the statement is true or false

Question 2

Kathy and Amy paint pictures and do caricatures to sell to tourists. In one day, Kathy can either paint two pictures or do four caricatures. In one day, Amy can either paint three pictures or do three caricatures.

For both Kathy and Amy, what is the opportunity cost of painting one picture? Who has the comparative advantage in painting pictures and who has the comparative advantage in doing caricatures? How might they be able to increase their total output?

blazinlyss · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

FALSE

Answer to Question 2

Kathy's opportunity cost of painting a picture is two caricatures. Amy's opportunity cost of painting a picture is one caricature. Amy has a comparative advantage in painting and Kathy has a comparative advantage in doing caricatures. They could increase output by specializing in producing the goods for which they have a comparative advantage.