1 Suppose that in country X the "bottom" 80% of the population receives 20% of the country's income. The "top" 20% receives the remaining 80% of the country's income. Draw the Lorenz curve for this country and the line of perfect equality (make sure to label your axis, curves, and points on the curves). 2 What is the Gini index in country X (show your math)? [Hint: Draw your Lorenz Curve and divide it into shapes for which you can use geometry to calculate the area.] 3 Suppose that country X has a population of 5,000 households. 4000 households have expenditure levels of $10,000, below the poverty line of $15,000, while the remainder of households have expenditures above the poverty line. What is the poverty headcount ratio for this country (show your work)? 4 What happens to inequality (no calculation needed, just the direction) and to the poverty rate (poverty headcount ratio) if the 4000 poor households transfer $2,500 on net (through the tax system) to the richer households? Does the poverty headcount ratio satisfy the Dalton-Pigou transfer rule? Does the Gini coefficient?
1 Suppose that in country X the "bottom" 80% of the population receives 20% of the country's income. The "top" 20% receives the remaining 80% of the country's income. Draw the Lorenz curve for this country and the line of perfect equality (make sure to label your axis, curves, and points on the curves). 2 What is the Gini index in country X (show your math)? [Hint: Draw your Lorenz Curve and divide it into shapes for which you can use geometry to calculate the area.] 3 Suppose that country X has a population of 5,000 households. 4000 households have expenditure levels of $10,000, below the poverty line of $15,000, while the remainder of households have expenditures above the poverty line. What is the poverty headcount ratio for this country (show your work)? 4 What happens to inequality (no calculation needed, just the direction) and to the poverty rate (poverty headcount ratio) if the 4000 poor households transfer $2,500 on net (through the tax system) to the richer households? Does the poverty headcount ratio satisfy the Dalton-Pigou transfer rule? Does the Gini coefficient?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
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![1 Suppose that in country X the "bottom" 80% of the population receives 20% of the country's
income. The "top" 20% receives the remaining 80% of the country's income. Draw the Lorenz
curve for this country and the line of perfect equality (make sure to label your axis, curves, and
points on the curves).
2 What is the Gini index in country x (show your math)? [Hint: Draw your Lorenz Curve and divide
it into shapes for which you can use geometry to calculate the area.]
3 Suppose that country X has a population of 5,000 households. 4000 households have
expenditure levels of $10,000, below the poverty line of $15,000, while the remainder of
households have expenditures above the poverty line. What is the poverty headcount ratio for
this country (show your work)?
What happens to inequality (no calculation needed, just the direction) and to the poverty rate
(poverty headcount ratio) if the 4000 poor households transfer $2,500 on net (through the tax
system) to the richer households? Does the poverty headcount ratio satisfy the Dalton-Pigou
4.
transfer rule? Does the Gini coefficient?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd1d857bc-14a0-42a9-b925-816e2f54ce12%2F4d42c273-5107-4b79-8f1a-4615e7701aff%2Fxjot8xn_processed.png&w=3840&q=75)
Transcribed Image Text:1 Suppose that in country X the "bottom" 80% of the population receives 20% of the country's
income. The "top" 20% receives the remaining 80% of the country's income. Draw the Lorenz
curve for this country and the line of perfect equality (make sure to label your axis, curves, and
points on the curves).
2 What is the Gini index in country x (show your math)? [Hint: Draw your Lorenz Curve and divide
it into shapes for which you can use geometry to calculate the area.]
3 Suppose that country X has a population of 5,000 households. 4000 households have
expenditure levels of $10,000, below the poverty line of $15,000, while the remainder of
households have expenditures above the poverty line. What is the poverty headcount ratio for
this country (show your work)?
What happens to inequality (no calculation needed, just the direction) and to the poverty rate
(poverty headcount ratio) if the 4000 poor households transfer $2,500 on net (through the tax
system) to the richer households? Does the poverty headcount ratio satisfy the Dalton-Pigou
4.
transfer rule? Does the Gini coefficient?
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