A typical Lorenz Curve, extracted from the Textbook, is shown below:e100Lorenz curve(actual distribution)60Perfect equality40B20CompleteinequalityD0 20406080100Percentage of householdsPoint d on the curve is best explained as55% of households earn about 55% of the national income50% of households earn about 80% of the national income80% of households earn about 80% of the national income80% of households earn about 55% of the national incomePercentage of Income80

The Lorenz curve is simply the graphical representation of income inequalities. The line of…

A typical Lorenz Curve, extracted from the Textbook, is shown below: 100 80 Lorenz curve (actual distribution) 60 40 Perfect equality B Complete inequality 0 20 40 60 80 100 Percentage of households Point d on the curve is best explained as O 55% of households earn about 55% of the national income 50% of households earn about 80% of the national income 80% of households earn about 80% of the national income 80% of households earn about 55% of the national income Percentage of Income 20

A typical Lorenz Curve, extracted from the Textbook, is shown below: 100 80 Lorenz curve (actual distribution) 60 40 Perfect equality B Complete inequality 0 20 40 60 80 100 Percentage of households Point d on the curve is best explained as O 55% of households earn about 55% of the national income 50% of households earn about 80% of the national income 80% of households earn about 80% of the national income 80% of households earn about 55% of the national income Percentage of Income 20

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter12: Income Distribution, Poverty, And Discrimination

Section: Chapter Questions

Problem 1SQP

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Canada had the following distribution of Income after taxes in 2006 Based on the information in the tables, which one is the correct Gini coefficient of income inequality? Deciles cumulative share of income Lorenz curve for after tax income in Canada 0% (2006) 1 0% 1 2 2%| 3 6% 0.8 4 11% 0.6 18% 0.4 26% 0.2 37% 50% 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 9 67% share of population 10 100% cumulative share of income equidistribution line O a. 0.47 O b. 0.43 O c. 0.42 O d. 0,44 O e. 0.23 O share of income
2.1 In an effort to make the distribution of income more nearly equal, the government of a country passes a tax law that changes the Lorenz curve from y = 0.97x for one year to y = 0.33x + 0.67x for the next year. Find the Gini coefficient of income for both years. (Round your answers to three decimal places.) before after Compare the distributions of income before and after the tax law was passed. Interpret the result. O The change increases the difference in incomes. The change makes no difference in incomes. O There is not enough information to compare the incomes. The change decreases the difference in incomes. O The change makes the incomes equal. Need Help? Read It
100% Cumulative percentage of income 90% -Jарan 80% --- Portugal 70% 60% 50% 40% 30% 20% 10% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative percentage of households Figure 5 Lorenz curves for Japan and Portugal Examine the Lorenz Curves for Japan and Portugal shown in Figure 5. Which of the following statements are correct? Select one or more answers. Select one or more: O The top quintile (top 20%) of households in Portugal have a higher share of total income than the top quintile (top 20%) of households in Japan. The bottom decile (bottom 10%) of households in Japan have a lower share of total income than the bottom decile (bottom 10%) of households in Portugal. Portugal will have a lower Gini coefficient than Japan. Japan has a lower level of income inequality than Portugal.
N Lorenz curve, shown as the sum of areas V+W+X+Y+Z % of Income C W V % of Population Use the sliders in the interactive tool to illustrate the following income distribution: % of Population 0 40 60 80 100 20 % of Income 4 12 26 46 100
Question 12 The following income distribution data are for Lesotho: Quintile Lowest 10% Lowest 20% Second quintile Third quintile Fourth quintile Highest 20% Percent Share 2.2% 3.0% 7.2% 12.5% 21.0% 56.3% Explain how to find the Gini coefficient, graphically. (Hint: You might want to use labels on your graph). You should be able to draw a graph on your computer, save it as a graph, picture, or document, and upload that graph, picture, or document to your answer box. If you cannot do that, you can always draw a graph on paper, take a picture, and upload the picture to your answer box.
2. Draw a complete and dearly labeled Lorenz Curve using the information below. Lowest 2nd 3rd 5th Quantile Quantile Quantile Quantile Quantile 3.6% 8.9% 14.8% 23% 49.8%
The data in the table below shows the income of some random people in Massachusetts. If these were the only people in Massachusetts what is the average (absolute) difference in income among all the pairs? nаme Pre-tax income Mayor Wu $20 Tom Brady $120 Matt Damon $60 QUESTION 12 (continued) What is the Gini coefficient for Massachusetts?
QUESTION 43 The Gini coefficient can be approximated from the Lorenz curve by the g=A/(A+B), where A is the area between the Lorenz curve and the 45-degree line and A +B is the area under the 45-degree line. Consider a population with three members and an aggregate income of 100. Which of the following statements are correct? O When the incomes are (50, 50, 0), the approximated Gini coefficient is 0.5. When the incomes for the thre members are (100/3, 100/3, 100/3), the approximate Gini coefficient is 0. O When the incomes are (100, 0, 0), the approximated Gini coefficient is 1. O A gini coefficient of 1 implies complete equality.
Question 11 The following income distribution data are for Lesotho: Quintile Lowest 10% Lowest 20% Second quintile Third quintile Fourth quintile Highest 20% Percent Share 2.2% 3.0% 7.2% 12.5% 21.0% 56.3% Carefully graph the Lorenz curve, labeling the axes. You should be able to draw a graph on your computer, save it as a graph, picture, or document, and upload that graph, picture, or document to your answer box. If you cannot do that, you can always draw a graph on paper, take a picture, and upload the picture to your answer box.
Instructions: Use the interactive tool to plot Lorenz curves for the information in the table. Quintile 1st % of Income, United States, 5 2010 % of Income, Bangladesh, 2010 9 2nd 10 13 3rd 14 16 United States data from Census.gov, before-tax income, rounded to 1/100ths. Data for Bangladesh from WorldBank.org, rounded to 1/100ths. 4th 20 21 5th 51 41 Report your answers to two decimal places. According to these data, the Gini coefficient for the United States in 2010 is The Gini coefficient for Bangladesh in 2010 is These data indicate that in 2010, income inequality is (Click to select) in the United States compared to Bangladesh.
A group of 10 people have the following annual incomes: $55,000, $30,000, $15,000, $20,000, $35,000, $80,000, $40,000, $45,000, $30,000, $50,000. Calculate the share of total income each quintile of this income distribution received. Do the top and bottom quintiles in this distribution have a greater or larger share of total income than the top and bottom quintiles of the U.S. income distribution for 2005?
Use the data from the table below to construct a Lorenz curve. Income Shares in the United States Lowest 20% Second Lowest 20% Third 20% Fourth 20% Highest 20% 5.2 10.3 15.3 22.4 46.9