Question

This stimulus presents a potentially tricky numbers and percentages scenario:

Larew asserts that, because those with the least money saw a higher percentage increase in their average income, they got more benefit than the rich got from their increases.

Mendota disagrees, with a point that might best be seen in a hypothetical scenario:

If an average person from the bottom quintile earned $10,000 ten years ago, and today earns $5,000 more, that represents a 50% increase.

Meanwhile, a wealthy person who 10 years ago earned $500,000 saw an increase of only a 10% increase, and is now earning $50,000 more than before.

What is the primary point of contention between Larew and Mendota in their discussion of changes in prosperity?

A) Whether percentage increases accurately reflect the benefits of income changes
B) Whether the wealthy have seen any increase in their income
C) Whether Mendota's hypothetical scenario is valid
D) Whether Larew's assertions are based on accurate data

Answer 1

The debate between Larew and Mendota centers on the significance of percentage increases in income versus absolute gains, revealing differing perspectives in understanding benefits amidst income inequality.

Step-by-step explanation:

The primary point of contention between Larew and Mendota is whether percentage increases accurately reflect the benefits of income changes. Larew suggests that a higher percentage increase for those with the least money implies they benefit more. Mendota challenges this view with a scenario showing that even with smaller percentage increases, the absolute amount gained by richer individuals is much larger.

This debate touches on concerns surrounding income inequality and the distribution of wealth. Examples from the real world indicate a growing gap, where increases in productivity and corporate profits benefit the upper echelons more than average workers, leading to a concentration of influence and wealth at the top. Mendota's hypothetical scenario underscores this issue by illustrating how percentage increases can be misleading without considering the absolute income changes.