dowment with respect to the economy's average, such that -# h Show that relative human capital of household i, evolves according to *4+1 = (²7²-(1-80)²) " . (24) ² (3) (4) c. Suppose the 2+1-locus (4) intercepts from above at 2. = 1 with the 45-degree line. What does this information imply for the evolution of inequality? Explain the impact of the education subsidy on the 2+1-locus with an appropriate diagram. Remark: No derivations are required here. Just provide a decent rationale and do as asked!
dowment with respect to the economy's average, such that -# h Show that relative human capital of household i, evolves according to *4+1 = (²7²-(1-80)²) " . (24) ² (3) (4) c. Suppose the 2+1-locus (4) intercepts from above at 2. = 1 with the 45-degree line. What does this information imply for the evolution of inequality? Explain the impact of the education subsidy on the 2+1-locus with an appropriate diagram. Remark: No derivations are required here. Just provide a decent rationale and do as asked!
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Could you please solve the parts b anc c of this question which I have attached so that I can compare with my answers?
![b. Let's define a variable z capturing the households' relative human capital en-
dowment with respect to the economy's average, such that
=
hi
Show that relative human capital of household i, evolves according to
Se
=
· (²²²_-(1-_-85)² ) " . (25) ²
z 8e)ē
(3)
(4)
c. Suppose the +1-locus (4) intercepts from above at x = 1 with the 45-degree
line. What does this information imply for the evolution of inequality? Explain
the impact of the education subsidy on the 2+1-locus with an appropriate
diagram.
Remark: No derivations are required here. Just provide a decent rationale
and do as asked!](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1fd16735-8754-414f-abc5-79108431741b%2Fb6450231-db0c-4af2-9ad9-1832b8ab1ae4%2F9v3htcs_processed.png&w=3840&q=75)
Transcribed Image Text:b. Let's define a variable z capturing the households' relative human capital en-
dowment with respect to the economy's average, such that
=
hi
Show that relative human capital of household i, evolves according to
Se
=
· (²²²_-(1-_-85)² ) " . (25) ²
z 8e)ē
(3)
(4)
c. Suppose the +1-locus (4) intercepts from above at x = 1 with the 45-degree
line. What does this information imply for the evolution of inequality? Explain
the impact of the education subsidy on the 2+1-locus with an appropriate
diagram.
Remark: No derivations are required here. Just provide a decent rationale
and do as asked!
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