Assumptions for Modeling Income Distribution in the WS-PS Model

Example Scenario for WS-PS Income Distribution Model

Determinants of Equilibrium Employment and Income Distribution

Limitation of the Lorenz Curve for Real Wage Analysis

In a macroeconomic framework where firms determine prices by adding a markup over their labor costs, what is the direct implication of an increase in this markup for the distribution of the economy's total output?

Explaining Changes in Income Distribution

Impact of Market Competition on Income Distribution

The Wage-Profit Trade-off

In an economic framework where firms set prices as a markup over labor costs and workers' wage demands depend on labor market conditions, a sustained increase in workers' bargaining power, with no change in the firms' markup, will result in a permanent increase in the share of national income going to labor.

In a macroeconomic model where total output per worker is divided between wages and profits, match each component of the model to its corresponding role in determining income distribution.

A government introduces new regulations that significantly decrease the level of competition in the product market. Within a framework where firms set prices and workers set wages, arrange the following outcomes in the logical order they would occur, leading to a new distribution of national income.

In an economic model where firms set prices as a markup over labor costs, the total value added per worker is divided into two main components: the real wage that goes to the worker, and the real ____ that is retained by the firm's owners.

Evaluating Policies for Income Distribution

Consider an economy where firms determine the prices of their goods by applying a consistent percentage markup over their labor costs. Workers' wage demands are influenced by the state of the labor market. If the government enacts a policy that substantially increases the value and duration of unemployment benefits, what is the most probable long-term consequence for the distribution of the economy's total income?

Visualizing Income Distribution with the WS-PS Model and Lorenz Curve

Assumptions of the Simple WS-PS Income Distribution Model

Illustrative Economy for the WS-PS Income Distribution Model

Formula for the Wage Share