## Inequality, Poverty, and Discrimination

Read this chapter for a more detailed look at the topic of income inequality and discrimination in the labor markets as these are real examples of market failures. Attempt the "Try It" problems at the end of each section before checking your answers.

### 3. The Economics of Poverty

#### 3.9. Answer to Try It! Problem

According to the absolute income test, the Smiths are poor because their income of $20,500 falls below the 2006 poverty threshold of$20,614. According to the relative income test, they are not poor because their $20,500 income is above the upper limit of the lowest quintile,$20,035.