Q1-. Consider three regions of a country with the following hypothetical income distribution data for four equal segments of the population. Population % Region A Region B Region C bottom 25% 0.05 0.10 0.02 2nd 25% 0.15 0.15 0.10 3rd 25% 0.30 0.20 0.25 top 25% 0.50 0.55 0.63 a) Draw the Lorenz curves for the three regions. b) What can you conclude about the level of inequality among the three regions from the graph. List the Regions by order of inequality (from lowest to highest) Q2-. Explain why a Lorenz curve can never lie above the 45° line. Under what circumstance would the Lorenz curve lie above the 45° line Q3-. Using a Lorenz curve diagram, explain how to calculate the Gini coefficient
Q1-. Consider three regions of a country with the following hypothetical income distribution data for four equal segments of the population. Population % Region A Region B Region C bottom 25% 0.05 0.10 0.02 2nd 25% 0.15 0.15 0.10 3rd 25% 0.30 0.20 0.25 top 25% 0.50 0.55 0.63 a) Draw the Lorenz curves for the three regions. b) What can you conclude about the level of inequality among the three regions from the graph. List the Regions by order of inequality (from lowest to highest) Q2-. Explain why a Lorenz curve can never lie above the 45° line. Under what circumstance would the Lorenz curve lie above the 45° line Q3-. Using a Lorenz curve diagram, explain how to calculate the Gini coefficient
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter20: Income Inequality And Poverty
Section: Chapter Questions
Problem 2CQQ
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Transcribed Image Text:Q1-. Consider three regions of a country with the following hypothetical income distribution data for four
equal segments of the population.
Population %
Region A
Region B
Region C
bottom 25%
0.05
0.10
0.02
2nd 25%
0.15
0.15
0.10
3rd 25%
0.30
0.20
0.25
top 25%
0.50
0.55
0.63
a) Draw the Lorenz curves for the three regions.
b) What can you conclude about the level of inequality among the three regions from the graph.
List the Regions by order of inequality (from lowest to highest)
Q2-. Explain why a Lorenz curve can never lie above the 45° line. Under what circumstance would
the Lorenz curve lie above the 45° line
Q3-. Using a Lorenz curve diagram, explain how to calculate the Gini coefficient
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