1. Income inequality and the poverty rateThe following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within anincome group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2019, the poverty line is set atan annual income of $40,850 for an individual.AShare of Total Income in Perkopia(Percent)Year Lowest QuintileSecond QuintileMiddle Quintile Fourth QuintileHighest Quintile20014.010.016.523.046.520073.89.715.022.549.020133.48.814.822.051.020193.08.214.021.853.0The data in the table suggest that there wasincome inequality from 2001 to 2019. Complete the following table to help you determine the poverty rate in Perkopia in 2019. To do this, begin by determining the total income of allindividuals in each quintile using the fact that total annual income in the economy is $500,000,000. Next, determine the income of an individual ineach quintile by dividing the total income of that quintile by the number of people in that quintile. (Hint: Recall that Perkopia has a population of10,000 people.) Finally, determine whether the individual income for each quintile falls below the poverty line of $40,850.Share of Income in 2019(Percent)Total Income(Dollars)QuintileIndividual Income(Dollars)Below Poverty Line?Lowest3.0Second8.2Middle14.0Fourth21.8Highest53.0Using the information in this table, the poverty rate in Perkopia in 2019 isSuppose that the government introduces a welfare program in which any individual with an income of less than $40,850 per year receives a lump-sumtransfer payment of $3,000 from the government. Assume that, in the short run, there is no change in labor-supply behavior among the people inPerkopia.In the year 2019, the poverty rate after the introduction of the welfare program in Perkopia isAgain, suppose the government introduces a welfare program in which any individual with an income of less than $40,850 receives a lump-sumtransfer payment of $3,000 from the government. Deborah, a resident of Perkopia who currently earns an income of $40,050, has the opportunity towork overtime and earn an additional $1,500 this year.Which of the following statements are correct? Check all that apply.Deborah would gain more income by turning down the overtime than she would if she accepted the overtime.The $3,000 in aid presents a disincentive for Deborah to make more than $40,850 per year.Deborah may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.二二二二二

1. Income inequality and the poverty rate The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2019, the poverty line is set at an annual income of $40,850 for an individual. Share of Total Income in Perkopia (Percent) Year Lowest Quintile Second Quintile Middle Quintile Fourth Quintile Highest Quintile 2001 4.0 10.0 16.5 23.0 46.5 2007 3.8 9.7 15.0 22.5 49.0 2013 3.4 8.8 14.8 22.0 51.0 2019 3.0 8.2 14.0 21.8 53.0 The data in the table suggest that there was income inequality from 2001 to 2019.

1. Income inequality and the poverty rate The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2019, the poverty line is set at an annual income of $40,850 for an individual. Share of Total Income in Perkopia (Percent) Year Lowest Quintile Second Quintile Middle Quintile Fourth Quintile Highest Quintile 2001 4.0 10.0 16.5 23.0 46.5 2007 3.8 9.7 15.0 22.5 49.0 2013 3.4 8.8 14.8 22.0 51.0 2019 3.0 8.2 14.0 21.8 53.0 The data in the table suggest that there was income inequality from 2001 to 2019.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Question

1. Income inequality and the poverty rate
The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an
income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2019, the poverty line is set at
an annual income of $40,850 for an individual.
A
Share of Total Income in Perkopia
(Percent)
Year Lowest Quintile
Second Quintile
Middle Quintile Fourth Quintile
Highest Quintile
2001
4.0
10.0
16.5
23.0
46.5
2007
3.8
9.7
15.0
22.5
49.0
2013
3.4
8.8
14.8
22.0
51.0
2019
3.0
8.2
14.0
21.8
53.0
The data in the table suggest that there was
income inequality from 2001 to 2019.

Complete the following table to help you determine the poverty rate in Perkopia in 2019. To do this, begin by determining the total income of all
individuals in each quintile using the fact that total annual income in the economy is $500,000,000. Next, determine the income of an individual in
each quintile by dividing the total income of that quintile by the number of people in that quintile. (Hint: Recall that Perkopia has a population of
10,000 people.) Finally, determine whether the individual income for each quintile falls below the poverty line of $40,850.
Share of Income in 2019
(Percent)
Total Income
(Dollars)
Quintile
Individual Income
(Dollars)
Below Poverty Line?
Lowest
3.0
Second
8.2
Middle
14.0
Fourth
21.8
Highest
53.0
Using the information in this table, the poverty rate in Perkopia in 2019 is
Suppose that the government introduces a welfare program in which any individual with an income of less than $40,850 per year receives a lump-sum
transfer payment of $3,000 from the government. Assume that, in the short run, there is no change in labor-supply behavior among the people in
Perkopia.
In the year 2019, the poverty rate after the introduction of the welfare program in Perkopia is
Again, suppose the government introduces a welfare program in which any individual with an income of less than $40,850 receives a lump-sum
transfer payment of $3,000 from the government. Deborah, a resident of Perkopia who currently earns an income of $40,050, has the opportunity to
work overtime and earn an additional $1,500 this year.
Which of the following statements are correct? Check all that apply.
Deborah would gain more income by turning down the overtime than she would if she accepted the overtime.
The $3,000 in aid presents a disincentive for Deborah to make more than $40,850 per year.
Deborah may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.
二二二二二

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