The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2007, the poverty line is set at an annual income of $12,700 for an individual. Year Share of Total Income in Perkopia (Percent) Lowest Quintile Second Quintile Middle Quintile Fourth Quintile Highest Quintile 2001 3.0 8.1 14.0 21.5 53.4 2007 3.4 9.0 14.8 22.0 50.8 2013 3.8 9.5 15.4 22.7 48.6 2019 4.0 10.0 16.5 24.0 45.5   The data in the table suggest that there was___________ income inequality from 2001 to 2019.   Complete the following table to help you determine the poverty rate in Perkopia in 2007. To do this, begin by determining the total income of all individuals in each quintile using the fact that total annual income in the economy is $500,000,000. Next, determine the income of an individual in each quintile by dividing the total income of that quintile by the number of people in that quintile. (Hint: Recall that Perkopia has a population of 10,000 people.) Finally, determine whether the individual income for each quintile falls below the poverty line of $12,700. Quintile Share of Income in 2007 Total Income Individual Income Below Poverty Line? (Percent) (Dollars) (Dollars) Lowest 3.4          Second 9.0          Middle 14.8          Fourth 22.0          Highest 50.8            Using the information in this table, the poverty rate in Perkopia in 2007 is ___________   Suppose that the government introduces a welfare program in which any individual with an income of less than $12,700 per year receives a lump-sum transfer payment of $4,000 from the government. Assume that, in the short run, there is no change in labor-supply behavior among the people in Perkopia. In the year 2007, the poverty rate after the introduction of the welfare program in Perkopia is_____   Again, suppose the government introduces a welfare program in which any individual with an income of less than $12,700 receives a lump-sum transfer payment of $4,000 from the government. Poornima, a resident of Perkopia who currently earns an income of $12,199, has the opportunity to work overtime and earn an additional $1,500 this year. Which of the following statements are correct? Check all that apply.   a) Poornima may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.   b) The $4,000 in aid presents a disincentive for Poornima to make more than $12,700 per year.   c) Poornima would gain more income by turning down the overtime than she would if she accepted the overtime.

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The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2007, the poverty line is set at an annual income of $12,700 for an individual.
Year
Share of Total Income in Perkopia
(Percent)
Lowest Quintile
Second Quintile
Middle Quintile
Fourth Quintile
Highest Quintile
2001 3.0 8.1 14.0 21.5 53.4
2007 3.4 9.0 14.8 22.0 50.8
2013 3.8 9.5 15.4 22.7 48.6
2019 4.0 10.0 16.5 24.0 45.5
 
The data in the table suggest that there was___________ income inequality from 2001 to 2019.
 
Complete the following table to help you determine the poverty rate in Perkopia in 2007. To do this, begin by determining the total income of all individuals in each quintile using the fact that total annual income in the economy is $500,000,000. Next, determine the income of an individual in each quintile by dividing the total income of that quintile by the number of people in that quintile. (Hint: Recall that Perkopia has a population of 10,000 people.) Finally, determine whether the individual income for each quintile falls below the poverty line of $12,700.
Quintile
Share of Income in 2007
Total Income
Individual Income
Below Poverty Line?
(Percent)
(Dollars)
(Dollars)
Lowest 3.4
 
 
    
Second 9.0
 
 
    
Middle 14.8
 
 
    
Fourth 22.0
 
 
    
Highest 50.8
 
 
    
 
Using the information in this table, the poverty rate in Perkopia in 2007 is ___________
 
Suppose that the government introduces a welfare program in which any individual with an income of less than $12,700 per year receives a lump-sum transfer payment of $4,000 from the government. Assume that, in the short run, there is no change in labor-supply behavior among the people in Perkopia.
In the year 2007, the poverty rate after the introduction of the welfare program in Perkopia is_____
 
Again, suppose the government introduces a welfare program in which any individual with an income of less than $12,700 receives a lump-sum transfer payment of $4,000 from the government. Poornima, a resident of Perkopia who currently earns an income of $12,199, has the opportunity to work overtime and earn an additional $1,500 this year.
Which of the following statements are correct? Check all that apply.
 
a) Poornima may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.
 
b) The $4,000 in aid presents a disincentive for Poornima to make more than $12,700 per year.
 
c) Poornima would gain more income by turning down the overtime than she would if she accepted the overtime.
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