Share of Total Income (%) Personal Income Individuals (money units) Quintiles Deciles 0.8 1.0 1.4 1.8 1.9 2.0 2.4 2.7 2.8 3.0 3.4 3.8 4.2 4.8 5.9 7.1 10.5 12.0 13.5 15.0 100.0 2 3 4 5 1.8 5 3.2 3.9 5.1 9. 10 11 12 13 14 15 16 17 18 19 20 Total (national income) 5.8 13 7.2 9.0 22 13.0 22.5 51 100 28.5 100.0 9,

Share of Total Income (%) Personal Income Individuals (money units) Quintiles Deciles 0.8 1.0 1.4 1.8 1.9 2.0 2.4 2.7 2.8 3.0 3.4 3.8 4.2 4.8 5.9 7.1 10.5 12.0 13.5 15.0 100.0 2 3 4 5 1.8 5 3.2 3.9 5.1 9. 10 11 12 13 14 15 16 17 18 19 20 Total (national income) 5.8 13 7.2 9.0 22 13.0 22.5 51 100 28.5 100.0 9,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. An economist produced the following Lorenz curves for the current income distribution and the projected income distribution 10 years from now in a certain country: Current Lorenz curve: f(x) = 0.15x+0.85x Projected Lorenz curve: g(x) = x'6 Compute the Gini index of income concentration ( to 2 decimal places ) for the current and projected curves. What can you say about the distribution of income 10 years from now? Is it more equitable or less?
Which statements are TRUE? A. Modern sector enlargement assures a better Lorenz Curve for a nation. B. The average poverty gap measures the sum of the differences the income of each person from the absolute poverty line. C. The multidimensional poverty index gives equal weight to all eight indicators. D. The normalized income shortfall is a measure of income inequality.
The closer the Lorenz curve for income is to the line of equality, the larger is the nation's total income. the smaller is the nation's total income. the more equally are incomes distributed. the larger the fraction of the nation's income received by the richest families.
Which of these is true of the Lorenz curve? The further away it is from the 45 degree line the more unequal is distribution. The closer it is to the 45 degree line the more unequal is distribution.
8. Four students have yearly incomes of $5,000, $15,000, $20,000, and $60,000. a. Make a table of the Lorenz Curve and use the Trapezoidal Rule with 4 trapezoids to find the area under the Lorenz Curve. Your answer should be correct to 2 places after the decimal point. The area under the Lorenz Curve is b. Use the results of Part a to find the Gini Index. Your answer should be correct to 2 places after the decimal point. The Gini Index is
3. Comparing Gini coefficients of different countries Aa Aa The following diagram shows the Lorenz curves for three countries. Country X's Lorenz curve is shown in blue, Country Y's Lorenz curve is shown in red, and Country Z's Lorenz curve is shown in green. Region I is the area above Country X's Lorenz curve and below the 45-degree line. Region II is the area below Country X's Lorenz curve and above Country Y's Lorenz curve. Region III is the area below Country Y's Lorenz curve and above Country Z's Lorenz curve. Region IV is the area below Country Z's Lorenz curve. INCOME (Cumulative percent) 100 80 60 40 20 0 The Gini coefficient for Country Z is given by Couny X 20 Country Y Country Z 11 III 60 IV 40 100 HOUSEHOLDS (Cumulative percent) 80 has the highest Gini coefficient.
What is the Lorenz curve and what does it illustrate? Are incomes distributed equally? What would happen if incomes were equal? Why do you think income distribution is so unequal? Identify and explain three reasons.
0.43 0.15 0.3 0.7 Cumulative of Income Putouilly Carve Cumulative of Population Poted begally Line The figure shows a Lorenz curve. If Area A is equal to 0.15 and Area B is equal to 0.35, what is the Gini coefficient? (Answers are rounded to two decimal places)
Consider the Lorenz curves for income for Deneb and Elnath as shown in this figure: Lorenz curves for Deneb and Elnath cumullative income share (%) 8 8 2 2 2 2 2 2 2 2 100 90 80 70 60 40 30 Lorenz curve for Elnath 0 0 10 20 30 40 50 60 70 80 90 100 income percentiles Lorenz curve for Deneb [If the image above doesn't appear click here to open it in a new tab.] Which of the following statements is true? [Hint: You do not need to calculate any areas to answer this question correctly!] The relative income inequalities of Deneb and Elnath cannot be determined from the information given. Income inequality is more extreme in Deneb than it is in Elnath. Deneb and Elnath have the same degree of income inequality. Income inequality is more extreme in Elnath than it is in Deneb.
Draw the Lorenz curve and compute the Gini index of a group whose annual incomes (in thousands of dollars) are given by the following frequency table. Value Frequency 30 2 50 4 60 5 90 4 100 3 120 2
Using the above Lorenz Curve, answer the following questions. . . Approximately what percentage of the income does the richest 20% of Country A earn? Approximately what percentage of the income does the poorest 20% of Country B earn? If the government of Country B increased the progressivity of income taxes, would its Lorenz Curve move closer to the 45-degree reference line, closer to Country A's Lorenz Curve, or not move at all?
Use the data from the table below to construct a Lorenz curve. Income Shares in the United States Lowest 20% Second Lowest 20% Third 20% Fourth 20% Highest 20% 5.2 10.3 15.3 22.4 46.9