Q1 which types of inefficiency described in chapter 10 do

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Q1. Which types of inefficiency described in chapter 10 do you think is most economically significant in the country that you know best? Elucidate why and give an example?

Q2. Disability payments replace a higher fraction of the wages of low-wage workers than of high-wage workers. Overall, average disability payments rise with the average wage. Assume wages of low-skilled workers fell sharply relative to high-wage workers. Explain how would this affect the incentives to enter disability for low-wage workers? Elucidate your answer.

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