Q. 4. The economy of Zenda has 10 people. Three of them modern sector of Zenda and eari traditional sector and earn only modern sector jobs open up and two people from the traditonal sector move to the modern sector. 200 per month, the rest live in the 100 per month. One day, two new (a) Show, that the Lorenz curves to the income distributions before and after must cross. Do this is two ways. (i) By graphing the Lorenz Curves. (ii) By first expressing both income distributions as divisions of a cake of size one and then showing that the two distribution are linked by opposing Dalton transfers. (iii) Calculate the coefficient of variation and the Gini coefficient for the two distributions. Do they agree about changes in inequality?

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Q. 4. The economy of Zenda has 10 people. Three of them live in the
modern sector of Zenda and eari
traditional sector and earn only
modern sector jobs open up and two people from the traditonal sector
move to the modern sector.
200 per month, the rest live in the
100 per month. One day, two new
(a) Show, that the Lorenz curves to the income distributions before
and after must cross. Do this is two ways.
(i) By graphing the Lorenz Curves.
(ii) By first expressing both income distributions as divisions of a
cake of size one and then showing that the two distribution are linked
by opposing Dalton transfers.
(iii) Calculate the coefficient of variation and the Gini coefficient
for the two distributions. Do they agree about changes in inequality?
Why?
Transcribed Image Text:Q. 4. The economy of Zenda has 10 people. Three of them live in the modern sector of Zenda and eari traditional sector and earn only modern sector jobs open up and two people from the traditonal sector move to the modern sector. 200 per month, the rest live in the 100 per month. One day, two new (a) Show, that the Lorenz curves to the income distributions before and after must cross. Do this is two ways. (i) By graphing the Lorenz Curves. (ii) By first expressing both income distributions as divisions of a cake of size one and then showing that the two distribution are linked by opposing Dalton transfers. (iii) Calculate the coefficient of variation and the Gini coefficient for the two distributions. Do they agree about changes in inequality? Why?
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