Which of the following options is correct as per the given figure? a. Both countries face income inequality. b. Inequality in country 2 is greater than inequality in country 1. c. Country 2 has the highest level of inequality because the distance between the Lorenz curve and the line of equality is highest. d. All of the above

Which of the following options is correct as per the given figure? a. Both countries face income inequality. b. Inequality in country 2 is greater than inequality in country 1. c. Country 2 has the highest level of inequality because the distance between the Lorenz curve and the line of equality is highest. d. All of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In DevEconLand, there are 10 people. Four of them earn $1/day each, two earn $3/day each and the remaining four earn $4/day each. If the poverty line is defined as $2/day, what is the headcount ratio, the total poverty gap ratio and the total poverty gap squared ratio respectively? Select one: a. 1/5, 1/5 and 1/10 respectively. b. 1/5, 2/5 and 1/5 respectively. c. 2/5, 1/5 and 1/10 respectively. d. None of the above.
TRUE or FALSE 51. Perfect inequality in the distribution of income can be exhibited in reality. 52. Holding all other incomes constant, if we transfer some income from a richer person to a poorer person, the resulting new income distribution is more unequal. 53. There is absolute poverty below the international poverty line. 54. Modern sector enlargement assures a better Lorenz Curve for a nation. 55. The average poverty gap measures the sum of the differences in the income of each person from the absolute poverty line. 56. The multidimensional poverty index gives equal weight to all eight indicators. 57. The normalized income shortfall is a measure of income inequality. d income inequality is thoroughly planned, implemented, and monitored, a nation is secured of achieving economic development. 59. The GINI Coefficient relates the Lorenz Curve and the line of perfect quality of percentage of income and…
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
How has assortative mating contributed to growing inequality? Taxes redistribute income from the poor to the rich O People marry someone similar to them, creating some households with many resources and others with few O Groups with political clout convince the government to implement exclusive institutions O New technologies like the internet create opportunities for the people with skills to use them
The $1.4 billion trick to make us accept income inequality Lotteries take money from the poor and redistribute it unequally. The poor, the uneducated, and minorities play the lottery the most, and it takes a big chunk of their income Source: The Huffington Post, January 12, 2016 If the news clip is correct, how does a lottery change the distribution of income? Draw two Lorenz curves to illustrate your answer. Lotteries result in the distribution of income Draw the Lorenz curve in a country that does not have lotteries. Label it Before Draw the Lorenz curve for the country after the introduction of lotteries. Label it After >>> To reposition the label click on the cross by the label box and dragging it 100 80 60 40- 20 Cumulative percentage of income 100 20 40 60 00 Cumulative percentage of households >>>Draw only the objects specified in the question G
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)?
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.
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?
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…
A. Explain the concepts of the 'Lorenz curve' and 'Gini coefficient'. In answering this question, explain the difference between a flatter Lorenz curve and a bent concave Lorenz curve (i.e., pointing to the right of a diagram). B. List and discuss two policies for reducing poverty,
The table shows the distribution of income in the Australia Complete the column of the table that records the cumulative percentages of income in Australia received by the cumulative percentages of households. Cumulative percentage of Income Households Lowest 20 percent (percentage) Households Income 8 Lowest 20 13 Lowest 40 Second 20 percent Third 20 percent 18 Fourth 20 percent 23 Highest 20 percent 38 Lowest 60 Lowest 80 100 100.0 The graph shows the Lorenz curve for the United States Draw the line of equality Draw a point to show the cumulative percentage of income received by the lowest 40 percent of Australian households Label it 1, Draw a point to show the cumulative percentage of income received by the lowest 80 percent of Australian households. Label it 2 Draw the Lorenz curve for Australia. Label it Based on the data provided, which country has the more unequal income distribution? OA Australa OB. Neither. They have the same degree of inequality. OC, The United States OD. It…