Suppose that the economy of Loserville has the following distribution of income: first quintile 15% of aggregate income second quintile 20% of aggregate income third quintile 20% of aggregate income fourth quintile 20% of aggregate income fifth quintile 25% of aggregate income a. From the information provided, please derive a Lorenz Curve for Loserville. Show graphically. b. From the Lorenz Curve you have drawn, find the Gini Coefficient. c. How does Loserville compare to the United States economy?

Suppose that the economy of Loserville has the following distribution of income: first quintile 15% of aggregate income second quintile 20% of aggregate income third quintile 20% of aggregate income fourth quintile 20% of aggregate income fifth quintile 25% of aggregate income a. From the information provided, please derive a Lorenz Curve for Loserville. Show graphically. b. From the Lorenz Curve you have drawn, find the Gini Coefficient. c. How does Loserville compare to the United States economy?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

1. An economy's Lorenz Curve reveals that an economy's highest income quintile has 65% of the economy's income while the lowest income quintile only has 5% of the economy's income. Solely based on the Lorenz Curve, is this distribution of income fair? Why or why not? 2. To combat income inequality and to generate increased tax revenues to fund expenditures, government officials decide to aggressively increase how progressive income taxes are, so much so that the top income earners are marginally taxed 90% of their income (and while this marginal tax rate may seem oppressive, these top income earners still have more than enough income to satisfy all of their needs and all but the most extravagant of wants - basically, these earners have more than enough money). Argue why this tax policy is a fair approach to fund government expenditures. Why might this tax policy fail to achieve its objectives (tax revenues would actually decline as a result)?
Incomes in China and India are a small fraction of incomes in the United States. But incomes in China and India are growing more quickly those in the United States. Draw the world Lorenz curve before the growth in income in China and India. Label it Before. >>> Reposition the label by clicking on the edge of the label box and dragging it. Draw the world Lorenz curve after the growth in income in China and India. Label it After. Inequality between the people in China and India and the people in the United States is O A. increasing OB. staying relatively constant C. decreasing OD. increasing in some years and decreasing in other years % 5 6 Selected: none Oll 87 & 7 O * 8 O 100- 80- 60- 40- 20- 0 Cumulative percentage of income ( 9 20 40 80 60 Cumulative percentage of households >>> Draw only the objects specified in the question. Delete Clear * ? ) 0 Next x 10 an rld" it fe dust real- lesto SITI Oriente 1 C++ ( Camp.o NS 1 ye Coding hool Stu Mihailescu NS 2 year. ython - Fu ers [Tutoria…
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
Assume that the government proposes a negative income tax that calculates taxes owed using the following formula: taxes owed = 0.25 Income $20,000. If a family earns an income of $60,000, how does this tax scheme affect them? they receive a subsidy of $5000 they pay $15,000 in taxes they pay $20,000 in taxes they receive an income subsidy of $15,000.
Consider a society consisting of two people. Jacques earns an income of $100,000 per year and Kyoko earns an income of $30,000 per year. The government is considering a redistribution plan that would impose a 25% tax on Jacques's income and give the revenue to Kyoko. Without any incentive distortion, Jacques would retain $75,000 and Kyoko would end up with $55,000. However, let us assume that since Jacques will not receive all the income he earns, he decides to work less and earn an income of only $90,000, of which 25%×$90,000=$22,50025%×$90,000=$22,500 will be owed in taxes. With the redistribution plan, Jacques will take home an income of . The $22,500 that Jacques pays in taxes will be transferred by the government to Kyoko. Let us assume that since Kyoko now receives payment from the government, she will not work as many hours and will earn an income from work of only $29,000 instead of her initial $30,000. With the redistribution plan, Kyoko's total income…
Suppose the teacher for your course, "Principles of Economics" is a libertarian and adheres strictly by its principles in running your economics class. What policies would you expect your teacher to institute? Policies a Libertarian Would Enforce Policies a Libertarian Would Not Enforce The teacher, seeing grade inequality, decides to give points from the best student's test to the worst's students test. The teacher decides to give everyone in the class an A. The teacher punishing a student for cheating on her income equality and poverty homework assignment. Grade the class on a curve to ensure even grade distribution. When proctoring a test, your teacher requires all students to be given the test face down and all turn over your tests at the same time so that no one has a time advantage.
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
See image