For questions 4 -6: Consider an economy with 1000 residents, and-the following income distribution: each person in the- bottom quartile of the income distribution earns $10,000; each person in the middle two quartiles earns $40,000; and each- person in the top quartile of the income distribution earns $160,000. Suppose the bottom quartile pays no taxes, the middle two quartiles pay 15 percent-of its income in taxes, and the top quartile pays 30 percent of its income in taxes. Two-thirds- of all tax money is redistributed equally to all citizens in the form of military defense, government pensions (social security), roads/highways, ete. The remaining one-third of tax money is disturbed entirely to the poorest quartile. 4. Without government tax and redistribution, the Gini coefficient associated with this income distribution is A. 0.327e B. 0.412-e C. 0.425e D. 0.450- 5. The total tax collected is A. $9 millione B. $15 millione C. $21 millione D. $30 millione 6. With government tax and redistribution, the Gini coefficient associated with this income distribution is A. 0.163e C. 0.246e D. 0.145e B. 0.152e

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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For questions 4 - 6: Consider an economy with 1000 residents, and the following income distribution: each person-in the
bottom quartile of the income distribution earns $10,000; 'each person in the middle two quartiles earns $40,000; and each:
person in the top quartile of the income distribution earns $160,000. Suppose the bottom quartile pays no taxes, the middle
two quartiles pay 15 percent of its income in taxes, and the top quartile pays 30 percent of its income in taxes. Two-thirds:
of all tax money is redistributed equally to all citizens in the form of military defense, government pensions (social security),
roads/highways, etc. The remaining one-third of tax money is disturbed entirely to the poorest quartile.
4. Without government tax and redistribution, the Gini coefficient associated with this income distribution is
A. 0.327e
B. 0.412.e
C. 0.425e
D. 0.450e
5. The total tax collected is
A. $9 million
B. $15 million-
C. $21 million
D. $30 million
6. With government tax and redistribution, the Gini coefficient associated with this income distribution is:
C. 0.246e
A. 0.163e
B. 0.152e
D. 0.145e
Transcribed Image Text:For questions 4 - 6: Consider an economy with 1000 residents, and the following income distribution: each person-in the bottom quartile of the income distribution earns $10,000; 'each person in the middle two quartiles earns $40,000; and each: person in the top quartile of the income distribution earns $160,000. Suppose the bottom quartile pays no taxes, the middle two quartiles pay 15 percent of its income in taxes, and the top quartile pays 30 percent of its income in taxes. Two-thirds: of all tax money is redistributed equally to all citizens in the form of military defense, government pensions (social security), roads/highways, etc. The remaining one-third of tax money is disturbed entirely to the poorest quartile. 4. Without government tax and redistribution, the Gini coefficient associated with this income distribution is A. 0.327e B. 0.412.e C. 0.425e D. 0.450e 5. The total tax collected is A. $9 million B. $15 million- C. $21 million D. $30 million 6. With government tax and redistribution, the Gini coefficient associated with this income distribution is: C. 0.246e A. 0.163e B. 0.152e D. 0.145e
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