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Gini coefficient is equal to the area between the line of perfect income equality and the Lorenz curve.
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- Q1. The graph below is an example of "P.O.W. Camp." Which of the following statements is(are) FALSE? Quantity of tea per period Panel (a) British Prisoners === MRS= Quantity of tea per period > MRS >> Panel (b) French Prisoners MRS= 1/2 E MRS Quantity of coffee per period Quantity of coffee per period (Source: Economica 12 (November 1945)) I. The price ratio is less than ½ at point A while it is greater than ½ at point B. II. The price ratio is greater than ½ at point A while it is less than ½ at point B. III. At point E, the price ratio is ½, and the British prisoners are maximizing their utility. IV. If trading is not allowed, the marginal utility of tea per price spent will be more than the marginal utility of coffee per price spent in Panel (a). A) I and IV B) I and II C) II and III D) III and IV E) III P₁₂Consider a Maldives island with ten inhabitants. Answer the questions below. a) Plot the Lorenz curve for the income distribution: (2,2,4,6,8,20,30,40,60,100) (2,2,4,6,8,20,30,40,60,100) Consider an income redistribution that takes 20% of income from each of the three richest individuals and distribute equally to individuals that have an income below the poverty line (9). Plot the Lorenz curve again to demonstrate that inequality has decreased. What happened to the coefficient of variation between the two periods? What can you conclude about the change in inequality between periods from this? b) Show on the same diagram the Lorenz curve for the income distribution: (8,18,20,22,26,28,30,32,40,48)(8,18,20,22,26,28,30,32,40,48) Compare and comment this new Lorenz curve with the Lorenz curves in part (a). Then, show that the three social welfare functions, W=∑MhW=∑Mh, W={MinWh}W={MinWh}, and W={MaxWh}W={MaxWh} rank the income distributions in parts (a) and (b) differently. c) Calculate the…Suppose there are 3 households in each society. This table shows income for poor, middle, and rich household, average income for all households, and the Gini coefficient for 4 societies. Based on this table, which of the following is true? (Select all that apply.) Society A Society B Society C Society D оооо Household Income Poor Middle Household Household 20,000 15,000 25,000 30,000 40,000 40,000 40,000 40,000 Rich Household 75,000 100,000 200,000 10,000,000 Society D has the most unequal income distribution. Society A has the most equal income distribution. Society D has the highest overall average income. Society A has the lowest overall average income. Average Income 45,000 51,667 88,333 3,356,667 Gini coefficient .27 .37 .44 .66
- We studied three measures of wage dispersion and two measures of wage asymmetry in the chapter. What are they?The following graph shows the labor market for research assistants in the fictional country of Universalia. The equilibrium wage is $10 per hour, and the equilibrium number of research assistants is 250. Suppose the government has decided to institute a $4-per-hour payroll tax on research assistants and is trying to determine whether the tax should be levied on the employer, the workers, or both (such that half the tax is collected from each side). Use the graph input tool to evaluate these three proposals. Entering a number into the Tax Levied on Employers field (initially set at zero dollars per hour) shifts the demand curve down by the amount you enter, and entering a number into the Tax Levied on Workers field (initially set at zero dollars per hour) shifts the supply curve up by the amount you enter. To determine the before-tax wage for each tax proposal, adjust the amount in the Wage field until the quantity of labor supplied equals the quantity of labor demanded. You will not be…Poverty is measured by the number of people who fall below a certain level of income—called the poverty line—that defines the income one needs for a basic standard of living. The official definition of the poverty line traces back to Group of answer choices A)The Great Depression B)Mollie Orshansky, whose idea was to define a poverty line based on the cost of a healthy diet. C)1953 and the ability to pay for housing and food. D)The 1965 cost of providing food, housing, and transportation.
- What do Levitt and Dubner mean by the term "pimpact"?(choose right answer) a:an analysis of the data shows a positive impact on the mean hourly wage of a street prostitute when a pimp is involved b:the authors are sarcastically referring to the fact that the mean age of street prostitutes is 15 and they are still dealing with acne c:the analysis shows that street prostitutes are abused and misused by pimps d:the analysis of data gathered from street prostitutes indicates that the payment to a prostitute for some sexual acts are greatly discounted when the "johns" are pimpsA group of 10 golfing buddies have the following annual incomes: Income $32, 000 $12, 000 $56, 000 $120, 000 $10, 000 $38, 000 $70, 000 $16, 000 $20, 000 $24, 000 What is the total amount of income comprising the lowest quintile of this income distribution? Provide your answer below:Describe how to calculate a Gini coefficient.