Q2] Given is the data for Country A and B:PopulationFractionCountry A'sIncomeCountry B'sIncomebottom 25%5 million10 million2nd 25%10 million15 million3rd 25%30 million20 milliontop 25%55 million55 milliona) Compute the cumulative income share and neatly plot (usingExcel) the Lorenz curve for these two countries with labels. Feelfree to use excel template that I have uploaded and copy paste theplot.b) Compute the Gini coefficient assuming the region beneath the tworespective Lorenz curve isFor country A = 0.2875For country B = 0.3250

Answered: Compute the cumulative income share and…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter15: Poverty And Economic Inequality

Section: Chapter Questions

Problem 36CTQ: Explain how a country may experience greater equality in the distribution of income, yet still...

See similar textbooks

Related questions

Question

Q2] Given is the data for Country A and B:
Population
Fraction
Country A's
Income
Country B's
Income
bottom 25%
5 million
10 million
2nd 25%
10 million
15 million
3rd 25%
30 million
20 million
top 25%
55 million
55 million
a) Compute the cumulative income share and neatly plot (using
Excel) the Lorenz curve for these two countries with labels. Feel
free to use excel template that I have uploaded and copy paste the
plot.
b) Compute the Gini coefficient assuming the region beneath the two
respective Lorenz curve is
For country A = 0.2875
For country B = 0.3250

Expert Solution

Step 1

The Lorenz curve is the graphical representation of the measure income or wealth inequality of a nation. In the plot, the straight diagonal line (or 45⁰ line) having a slope of 1 is the locus of perfect equality of income. The greater is the distance between the Lorenz curve and the straight line, the higher is the value of inequality in the country.

The following figure depicts the Lorenz curve of both the countries (A&B) which has been plotted using the data given in the question –

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions