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Your roommate is a better cook than you are
Your roommate is a better cook than you are, but you can clean more quickly than your roommate can. If your roommate did all of the cooking and you did all of the cleaning, would your chores take you more or less time than if you divided each task evenly? Give a similar example of how specialization and trade can make two countries both better off.
A recent bill reforming the governments antipoverty programs limited
A recent bill reforming the governments antipoverty programs limited many welfare recipients to only two years of benefits.
a. How does this change affect the incentives for working?
b. How might this change represent a tradeoff between equity and efficiency?
The Social Security system provides income for people over age 65
The Social Security system provides income for people over age 65.
If a recipient of Social Security decides to work and earn some income, the amount he or she receives in Social Security benefits is typically reduced.
a. How does the provision of Social Security affect people’s incentive to save while working?
b. How does the reduction in benefits associated with higher earnings affect people’s incentive to work past age 65?