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# Income Distribution

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### Rate of Change Reactions

U(x,y)=X(square)Y Px=\$1.60 Py=\$8 I=\$90 calculate the rate of change in the cost of living for the consumer using the a. laspeyeres Index (cpi b. paasche index (gdp deflator) c. true index (ideal index) d. if the consumer's income had increased to I=\$96 per period, is the consumer better off or worse off than before?

### Salesperson compensation

Two successful firms are observed with quite different compensation plans for their salespeople. One firm pays its salespeople on a commission basis, whereas the other firm pays its salespeople fixed salaries. Do you think that one of the two companies is making a mistake? What are the pros and cons of each approach?

### GROUP'S SHARE of Income Taxes

Latest Data available is for the year 2003 1. What is the Groups Share of and the Income Split Point for Individual Income Taxes as of 2003 for the following group of income earners: GROUP'S SHARE of Income Taxes INCOME SPLIT POINT Top 1% of income earners

### Assume that you have the following information about a country.

Assume that you have the following information about a country: Percentile of population Income in Billions %share cumm value Bottom 20% \$300 5% 5% 2nd 20% 500

### 5. Average daily balance, average monthly balance

Suppose that you never carry cash. Your paycheck of \$1,000 per month is deposited directly into your checking account on the first day of the month, and you spend your money at a constant rate so that at the end of each month your checking account balance is zero. What is your average daily money balance for the month? H

### Income distribution

Suppose John and Kate must split a fixed income of \$100. Marginal Utility for John: MUj=400-2Ij Marginal Utility for Kate: MUk=400-6Ik Note: Ij and Ik are the amounts of income to John and Kate respectively. a. What is the optimal distribution of income if social welfare function is additive. What if the reverse is t

### External financing Question

Company X expects sales next year = \$5,000,000. Inventory and accounts receivable will increase \$900,000 to accommodate this sales level. The firm has a steady profit margin of 20% and 40% dividend payout. How much external financing will the firm have to seek?

### Distribution of Income

The distribution of income in the US should be more equal. Comment.

### GDP versus GNP

What is the difference between gross domestic product (GDP) and gross national product (GNP)?

### Why invest in Hewlet Packard?

What is a good rational, financial case for investment in HP?

### Financial Statement Analysis/Accounting

On December 31, 2004, Acquire Company acquired Target Company. Acquire issued \$5,000,000 in stock in exchange for 85% of the outstanding shares of Target. The acquisition was treated as a purchase. The historical cost balance sheets of Acquire and Target prior to the acquisition are given below. Please see attached.

### GDP Problems

Answer the following questions based on the following data...GDP totals? GNP totals? Net domestic product is? National Income Totals? (See attachment for full question)

### level of autonomous consumption in the economy

Please answer the following questions based on the following data (\$ in billions)... The level of autonomous consumption in the economy is? The level of induced consumption at a disposible income of \$600 billion is? etc. (See attachment for full questions)

### Finance

Inventory on Dec 31,2004 is understated by 66,000 inventory on dec 31, 2005 is overstated by 30,000 year sold 2004 2005 2006 a.cost of good 715,000 847000 770000 b.net income 220,000 275000 231000 c.total current assets 1,15,000 1,265,

### Personal distribution of income--what is the trend?

Visit the U.S. Census Bureau website at www.census.vov/hhes/income/midclass/index.html and select Data Highlights. Since 1969, how has the share of aggregate household income received by the lowest and highest income income quintiles (fifths) changes. Make a summary and sound conclusion.

### Little state government borrowing, but a lot of local government debt

What is the signifigance (pros/cons) - to the State and the local governments - when the State has low State borrowing but the local government debt is high (ie California, North Carolina)?

### (MPC and MPS)

If consumption increases by \$12 billion when real disposable income increases by \$15 billion, What is the value of the MPC? What is the relationship between the MPC and the MPS? If the MPC rises, what must happen to the MPS? How is the MPC related to the consumption function? How is the MPS related to the saving function?

### The Marginal Propensity to Consume (MPC)

The marginal propensity to consume (MPC) equals 0.3, and the marginal propensity to import (MPm) is 0.1. If Americans suddenly increase their desire for European cars and the MPm increases to 0.3, on the basis of the Keynesian model of output determination: A) the multiplier will rise by 20% of its original value. B) an

### Company's Solvency, Liquidity, and Profitability

Using the following ratios, calculate the company's solvency, liquidity, and profitability: a) Current ratio b) Return on sales c) Earnings per share (EPS) d) Debt ratio e) Price earnings ratio The company's annual income statement and balance sheet are attached.