100Cumulative Percentage of Income80888LKLine ofPerfect IncomeEqualityLorenz Curve 1Lorenz Curve 220406080 100Cumulative Percentage of HouseholdsRefer to Exhibit 28-2. This graph depicts the Lorenz curve for two countries, country 1 (Lorenz curve 1) and country 2 (Lorenz curve2). Although the Gini coefficient isin country 1 than in country 2, the bottom quintile inreceives a largershare of income compared to the bottom quintile inO a. lower, country 2; country 1O b. lower, country 1; country 2Oc. higher, country 2; country 1O d. higher, country 1; country 2

A graphic depiction of income or wealth distribution is the Lorenz Curve. It demonstrates the…

100 Cumulative Percentage of Income 8 80 60 20 0 Line of Perfect Income Equality Lorenz Curve 1 Lorenz Curve 2 1 60 20 40 80 100 Cumulative Percentage of Households Refer to Exhibit 28-2. This graph depicts the Lorenz curve for two countries, 2). Although the Gini coefficient is in country 1 than in country share of income compared to the bottom quintile in O a. lower, country 2; country 1 O b. lower, country 1; country 2 Oc. higher, country 2; country 1 O d. higher, country 1; country 2

100 Cumulative Percentage of Income 8 80 60 20 0 Line of Perfect Income Equality Lorenz Curve 1 Lorenz Curve 2 1 60 20 40 80 100 Cumulative Percentage of Households Refer to Exhibit 28-2. This graph depicts the Lorenz curve for two countries, 2). Although the Gini coefficient is in country 1 than in country share of income compared to the bottom quintile in O a. lower, country 2; country 1 O b. lower, country 1; country 2 Oc. higher, country 2; country 1 O d. higher, country 1; country 2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the Gini coefficient of a nation in 1980 was 0.50 and in 2020 it was 0.40, the nation's O income inequality is less in 2020 O income inequality is more in 2020 O tax system is less progressive in 2020 O tax system is more progressive in 2020
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Using the above Lorenz Curve, if Economy A decreased the progressivity of income taxes, then Economy A's Lorenz Curve would shift closer to the 45-degree reference line. shift closer to Economy B's Lorenz Curve. not shift at all
a) With the following data draw a Lorenz Curve, putting labels on the graph and writing out data point values. Explain what the Lorenz Curve illustrates, and what the results mean. b) Now explain how one gets the Gini Coefficient from the Lorenz Curve, and what information the coefficient provides.
Using the above Lorenz Curve, answer the following questions. . . Approximately what percentage of the income does the richest 20% of Country A earn? Approximately what percentage of the income does the poorest 20% of Country B earn? If the government of Country B increased the progressivity of income taxes, would its Lorenz Curve move closer to the 45-degree reference line, closer to Country A's Lorenz Curve, or not move at all?
K A Lorenz curve plots the A. percentage of total income received by each quintile against the percentage of households in the quintile OB. trend in the cumulative percentage of income received by each quintile against trend in the number of households O C. average income received by each quintile against the number of households in the quintile O D. cumulative percentage of income against the cumulative percentage of households Next
K In recent years, as the gap between the rich and the poor has increased, the Lorenz curve has O A. shifted away from the line of equality OB. shifted closer to the line of equality O c. not changed, but there has been a movement down along it O D. not changed, but there has been a movement up along it Ne
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