1. Why Do Incomes Differ? Preparing to Teach HS Economics 2014

2. Wages are determined in the factor (resource) market

3. Like other prices, wages are set by supply and demand Wage Quantity SLSL DLDL W eq Q eq

4. Wage Quantity SLSL DLDL W eq Q eq Supply of labor is determined by the workers’ opportunity cost, as well as skills and abilities Demand for labor is determined by the price of the product and the productivity of the worker

5. Quantity Wage SLSL DLDL W eq Q eq Why does LeBron James get paid more than me? Wage SLSL DLDL W eq Q eq

6. Lesson 13, Who Decides Wage Rates? National Occupational Employment and Wage Estimates (2012) Retail salesperson: $25,310 Medical secretary: $32,670 Firefighter: $47,850 Electrician: $53,030 Secondary school teacher: $57,710 Police officer: $57,770 Insurance sales agent: $63,400 Registered nurse: $67,930 Pharmacist: $114,950 Computer and information systems manager: $129,130 Anesthesiologist: $232,830 Source: http://www.bls.gov/oes/current/oes_nat.htm

7. Lesson 13 - Debriefing What is a labor market? Who represents supply, and who represents demand in a labor market? What is derived demand? How are wages linked to the prices paid for goods and services? How is productivity linked towages? Why do surgeons earn higher salaries than retail salespeople?

8. Income distribution can be measured by quintiles

9. Income distribution can be measured by a Lorenz Curve www.worldbank.org

10. Many interactive graphics and videos demonstrate income and wealth inequality The L-Curve Wealth Inequality in America

11. Why does income distribution matter? Income distribution affects allocation decisions (whose utility matters?) Income distribution affect the achievement gap, thus social mobility Income distribution affects political decisions – Tax policy – Provision of public goods – Collaboration v. dissension

12. What is the government’s role? In a market economy, the government must: Establish property rights Protect borders/national defense In the U.S. economy, the government has additional economic roles: Provision of public goods Protection of common resources Taxes/regulations/subsidies to address externalities Consumer protection and information Trust and anti-trust provisions Safety net/income redistribution Economic stability

13. Government in the *Circular Flow

14. Environmental Quality at Discount Prices, Economics and the Environment