1. In 1984, individual balances in private retirement plans were $865 billion. By thirty years later, they had risen to almost $25 trillion. In general, balances in private retirement plans are not included in the statistics that show rising income or wealth inequality. How might such an oversight affect our conclusions about inequality?
2. Today, usually at little or no cost, you can Skype your friends and family, no matter where they are located. Are you both psychologically and economically richer? Why or why not? Similarly, you can follow the lives of the rich and famous via their Twitter feeds, their blogs, or their Facebook pages. Are you better or worse off because you have this option?
3. Suppose an employer offers a base wage of $20 per hour for the first forty hours of work each week and overtime pay of $30 per hour for any hours beyond forty per week; the employer allows workers to choose their own hours of work. Suppose employee A chooses to work thirty-six hours per week and employee B chooses to work forty-two hours per week. Compute the average weekly earnings for employees A and B and the "earnings gap" (in percentage terms) between them. In your view, does this observed earnings gap constitute discrimination? Justify your conclusion.
4. Suppose you own a company. If you hire ten men, each of them at $70,000 per year, your firm will be able to sell $1,000,000 in output this year, and you will be able to earn $50,000 in profits, an amount that is normal for a firm of your size in your industry. (Your firm's other costs, such as for rent and advertising, will be $250,000 this year.) Now assume that you could hire ten women for $56,000 each, instead of hiring the men. What would your total profits be if you hired the women and they were just as productive as the more expensive men? Show all calculations.