Author Question: What is meant by the term assortative mating and how does it affect the distribution of wealth? ... (Read 60 times)

crazycityslicker · **on:** Jun 29, 2018

What is meant by the term assortative mating and how does it affect the distribution of wealth?

What will be an ideal response?

Question 2

What is the relationship between the income effect and the substitution effect for a normal good and what is it for an inferior good?

What will be an ideal response?

anoriega3 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Assortative mating is the tendency for people to marry within their own socioeconomic class. Wealthy people tend to marry other wealthy people; wealth remains concentrated and this fact contributes to the skewed distribution of wealth.

Answer to Question 2

For a normal good, the income effect reinforces the substitution effect. In other words, if the price falls so that a consumer's real income increases, both the substitution effect and the income effect lead the consumer to increase his or consumption of the good. For an inferior good, the income effect reduces the substitution effect. In this case, when the price of a good falls, the substitution effect leads to an increase in the consumption of the good and the income effect leads to a decrease in the consumption of the good.