Suppose the village of Utopia has 5 households, with expenditure levels [1, 4, 5, 9 and 13]. Suppose the poverty line is 5. Draw the poverty profile for Utopia, including the poverty line. Calculate P0, P1, and P2 for this village. Suppose you have a budget of 4 to spend on reducing poverty in this village. How you would allocate this budget if your objective was to mostly reduce P0, P1, or P2, respectively?

Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter33: Income, Income Distribution, And Poverty
Section: Chapter Questions
Problem 8E
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Suppose the village of Utopia has 5 households, with expenditure levels [1, 4, 5, 9 and 13]. Suppose the poverty line is 5.

  1. Draw the poverty profile for Utopia, including the poverty line.

  2. Calculate P0, P1, and P2 for this village.

  3. Suppose you have a budget of 4 to spend on reducing poverty in this village. How you would allocate this budget if your objective was to mostly reduce P0, P1, or P2, respectively?

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