Cumulative distribution of income.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 12, Problem 1SQP

(a):

To determine

Cumulative distribution of income.

(a):

Expert Solution

Explanation of Solution

The economic development is achieved when the economic price increases per head of the population in the economy. The unequal distribution of the economic price between the people in the economy causes the income inequality in the economy. The income inequality is the situation in the economy in which the major part of the income will be earned by a smaller proportion of the population and vice versa.

The cumulative share of income can be easily calculated by adding the share of income with each preceding level's cumulative share of income. Here, in this case, the percentage share of income for A for the lowest fifth is 17.7 percent. Since there are no preceding levels, the cumulative share would remain the same as 17.7 percent. The percentage share of income for the second lowest fifth is 19.9 percent. Thus, the cumulative share of the second lowest fifth will be summation of the percentage share of both lowest fifth and second lowest fifth, which can be calculated as follows:

Cumulative share of incomeSecond lowest fifth=[Percentage of incomeLowest fifth+Percentage of incomesecond Lowest fifth]=17.7+19.9=37.6

Thus, the cumulative share of income for the second lowest fifth is calculated to be 37.6 percent. Similarly, the cumulative share of income can be calculated, and the table can be completed as follows:

	A		B
Percentage of families	Percentage share	Cumulative share	Percentage share	Cumulative share
Lowest fifth	17.7%	17.7%	9.0%	9.0%
Second lowest fifth	19.9	37.6	14.2	23.2
Middle fifth	20.4	58.0	17.5	40.7
Second highest fifth	20.7	78.7	21.9	62.6
Highest fifth	21.3	100.0	37.4	100.0

Economics Concept Introduction

Income Inequality: The income inequality is the situation where most of the national income of the economy would be produced by a small percentage of the population, whereas the minor portion of the national income would be accounted by the largest portion of the population. Thus, there will be a highest concentration of wealth in a few people in the economy.

(b):

To determine

Lorenz curve of the economy.

(b):

Expert Solution

Explanation of Solution

The Lorenz curve is the graphical illustration of the distribution of wealth in the economy. It is drawn on the cumulative percentage of income against the cumulative percentage of the population. Thus, it shows the cumulative shares of income received by the family. Thus, based on the table above, the Lorenz curve can be constructed as follows:

Economics For Today, Chapter 12, Problem 1SQP

(c):

To determine

Country with more equal distribution of income.

(c):

Expert Solution

Explanation of Solution

From the Lorenz curve diagram, it can be identified that the line that lies more close to the line of equality has more equal distribution of income. From the diagram, it is identified that Lorenz curve of Country A is closest to the line of equality and thus, Country A has more equal income distribution.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

MC The diagram shows a pharmaceutical firm's demand curve and marginal cost curve for a new heart medication for which the firm holds a 20-year patent on its production. Assume this pharmaceutical firm charges a single price for its drug. At its profit-maximizing level of output, it will generate a total profit represented by OA. areas J+K. B. areas F+I+H+G+J+K OC. areas E+F+I+H+G. D. - it is not possible to determine with the informatio OE. the sum of areas A through K. (...) Po P1 Price F P2 E H 0 G B Q MR D ō

Price Quantity $26 0 The marketing department of $24 20,000 Johnny Rockabilly's record company $22 40,000 has determined that the demand for his $20 60,000 latest CD is given in the table at right. $18 80,000 $16 100,000 $14 120,000 The record company's costs consist of a $240,000 fixed cost of recording the CD, an $8 per CD variable cost of producing and distributing the CD, plus the cost of paying Johnny for his creative talent. The company is considering two plans for paying Johnny. Plan 1: Johnny receives a zero fixed recording fee and a $4 per CD royalty for each CD that is sold. Plan 2: Johnny receives a $400,000 fixed recording fee and zero royalty per CD sold. Under either plan, the record company will choose the price of Johnny's CD so as to maximize its (the record company's) profit. The record company's profit is the revenues minus costs, where the costs include the costs of production, distribution, and the payment made to Johnny. Johnny's payment will be be under plan 2 as…

Which of the following is the best example of perfect price discrimination? A. Universities give entry scholarships to poorer students. B. Students pay lower prices at the local theatre. ○ C. A hotel charges for its rooms according to the number of days left before the check-in date. ○ D. People who collect the mail coupons get discounts at the local food store. ○ E. An airline offers a discount to students.

Answer 2

Question

Chapter 12, Problem 1SQP

(a):

To determine

Cumulative distribution of income.

(a):

Expert Solution

Explanation of Solution

The economic development is achieved when the economic price increases per head of the population in the economy. The unequal distribution of the economic price between the people in the economy causes the income inequality in the economy. The income inequality is the situation in the economy in which the major part of the income will be earned by a smaller proportion of the population and vice versa.

The cumulative share of income can be easily calculated by adding the share of income with each preceding level's cumulative share of income. Here, in this case, the percentage share of income for A for the lowest fifth is 17.7 percent. Since there are no preceding levels, the cumulative share would remain the same as 17.7 percent. The percentage share of income for the second lowest fifth is 19.9 percent. Thus, the cumulative share of the second lowest fifth will be summation of the percentage share of both lowest fifth and second lowest fifth, which can be calculated as follows:

Cumulative share of incomeSecond lowest fifth=[Percentage of incomeLowest fifth+Percentage of incomesecond Lowest fifth]=17.7+19.9=37.6

Thus, the cumulative share of income for the second lowest fifth is calculated to be 37.6 percent. Similarly, the cumulative share of income can be calculated, and the table can be completed as follows:

	A		B
Percentage of families	Percentage share	Cumulative share	Percentage share	Cumulative share
Lowest fifth	17.7%	17.7%	9.0%	9.0%
Second lowest fifth	19.9	37.6	14.2	23.2
Middle fifth	20.4	58.0	17.5	40.7
Second highest fifth	20.7	78.7	21.9	62.6
Highest fifth	21.3	100.0	37.4	100.0

Economics Concept Introduction

Income Inequality: The income inequality is the situation where most of the national income of the economy would be produced by a small percentage of the population, whereas the minor portion of the national income would be accounted by the largest portion of the population. Thus, there will be a highest concentration of wealth in a few people in the economy.

(b):

To determine

Lorenz curve of the economy.

(b):

Expert Solution

Explanation of Solution

The Lorenz curve is the graphical illustration of the distribution of wealth in the economy. It is drawn on the cumulative percentage of income against the cumulative percentage of the population. Thus, it shows the cumulative shares of income received by the family. Thus, based on the table above, the Lorenz curve can be constructed as follows:

Economics For Today, Chapter 12, Problem 1SQP

(c):

To determine

Country with more equal distribution of income.

(c):

Expert Solution

Explanation of Solution

From the Lorenz curve diagram, it can be identified that the line that lies more close to the line of equality has more equal distribution of income. From the diagram, it is identified that Lorenz curve of Country A is closest to the line of equality and thus, Country A has more equal income distribution.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 12, Problem 1SQP

(a):

To determine

Cumulative distribution of income.

(a):

Expert Solution

Explanation of Solution

The economic development is achieved when the economic price increases per head of the population in the economy. The unequal distribution of the economic price between the people in the economy causes the income inequality in the economy. The income inequality is the situation in the economy in which the major part of the income will be earned by a smaller proportion of the population and vice versa.

The cumulative share of income can be easily calculated by adding the share of income with each preceding level's cumulative share of income. Here, in this case, the percentage share of income for A for the lowest fifth is 17.7 percent. Since there are no preceding levels, the cumulative share would remain the same as 17.7 percent. The percentage share of income for the second lowest fifth is 19.9 percent. Thus, the cumulative share of the second lowest fifth will be summation of the percentage share of both lowest fifth and second lowest fifth, which can be calculated as follows:

Cumulative share of incomeSecond lowest fifth=[Percentage of incomeLowest fifth+Percentage of incomesecond Lowest fifth]=17.7+19.9=37.6

Thus, the cumulative share of income for the second lowest fifth is calculated to be 37.6 percent. Similarly, the cumulative share of income can be calculated, and the table can be completed as follows:

	A		B
Percentage of families	Percentage share	Cumulative share	Percentage share	Cumulative share
Lowest fifth	17.7%	17.7%	9.0%	9.0%
Second lowest fifth	19.9	37.6	14.2	23.2
Middle fifth	20.4	58.0	17.5	40.7
Second highest fifth	20.7	78.7	21.9	62.6
Highest fifth	21.3	100.0	37.4	100.0

Economics Concept Introduction

Income Inequality: The income inequality is the situation where most of the national income of the economy would be produced by a small percentage of the population, whereas the minor portion of the national income would be accounted by the largest portion of the population. Thus, there will be a highest concentration of wealth in a few people in the economy.

(b):

To determine

Lorenz curve of the economy.

(b):

Expert Solution

Explanation of Solution

The Lorenz curve is the graphical illustration of the distribution of wealth in the economy. It is drawn on the cumulative percentage of income against the cumulative percentage of the population. Thus, it shows the cumulative shares of income received by the family. Thus, based on the table above, the Lorenz curve can be constructed as follows:

Economics For Today, Chapter 12, Problem 1SQP

(c):

To determine

Country with more equal distribution of income.

(c):

Expert Solution

Explanation of Solution

From the Lorenz curve diagram, it can be identified that the line that lies more close to the line of equality has more equal distribution of income. From the diagram, it is identified that Lorenz curve of Country A is closest to the line of equality and thus, Country A has more equal income distribution.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 1SQP

(a):

To determine

Cumulative distribution of income.

(a):

Expert Solution

Explanation of Solution

The economic development is achieved when the economic price increases per head of the population in the economy. The unequal distribution of the economic price between the people in the economy causes the income inequality in the economy. The income inequality is the situation in the economy in which the major part of the income will be earned by a smaller proportion of the population and vice versa.

The cumulative share of income can be easily calculated by adding the share of income with each preceding level's cumulative share of income. Here, in this case, the percentage share of income for A for the lowest fifth is 17.7 percent. Since there are no preceding levels, the cumulative share would remain the same as 17.7 percent. The percentage share of income for the second lowest fifth is 19.9 percent. Thus, the cumulative share of the second lowest fifth will be summation of the percentage share of both lowest fifth and second lowest fifth, which can be calculated as follows:

Cumulative share of incomeSecond lowest fifth=[Percentage of incomeLowest fifth+Percentage of incomesecond Lowest fifth]=17.7+19.9=37.6

Thus, the cumulative share of income for the second lowest fifth is calculated to be 37.6 percent. Similarly, the cumulative share of income can be calculated, and the table can be completed as follows:

	A		B
Percentage of families	Percentage share	Cumulative share	Percentage share	Cumulative share
Lowest fifth	17.7%	17.7%	9.0%	9.0%
Second lowest fifth	19.9	37.6	14.2	23.2
Middle fifth	20.4	58.0	17.5	40.7
Second highest fifth	20.7	78.7	21.9	62.6
Highest fifth	21.3	100.0	37.4	100.0

Economics Concept Introduction

Income Inequality: The income inequality is the situation where most of the national income of the economy would be produced by a small percentage of the population, whereas the minor portion of the national income would be accounted by the largest portion of the population. Thus, there will be a highest concentration of wealth in a few people in the economy.

(b):

To determine

Lorenz curve of the economy.

(b):

Expert Solution

Explanation of Solution

The Lorenz curve is the graphical illustration of the distribution of wealth in the economy. It is drawn on the cumulative percentage of income against the cumulative percentage of the population. Thus, it shows the cumulative shares of income received by the family. Thus, based on the table above, the Lorenz curve can be constructed as follows:

Economics For Today, Chapter 12, Problem 1SQP

(c):

To determine

Country with more equal distribution of income.

(c):

Expert Solution

Explanation of Solution

From the Lorenz curve diagram, it can be identified that the line that lies more close to the line of equality has more equal distribution of income. From the diagram, it is identified that Lorenz curve of Country A is closest to the line of equality and thus, Country A has more equal income distribution.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1SQP

(a):

To determine

Cumulative distribution of income.

(a):

Expert Solution

Explanation of Solution

The economic development is achieved when the economic price increases per head of the population in the economy. The unequal distribution of the economic price between the people in the economy causes the income inequality in the economy. The income inequality is the situation in the economy in which the major part of the income will be earned by a smaller proportion of the population and vice versa.

The cumulative share of income can be easily calculated by adding the share of income with each preceding level's cumulative share of income. Here, in this case, the percentage share of income for A for the lowest fifth is 17.7 percent. Since there are no preceding levels, the cumulative share would remain the same as 17.7 percent. The percentage share of income for the second lowest fifth is 19.9 percent. Thus, the cumulative share of the second lowest fifth will be summation of the percentage share of both lowest fifth and second lowest fifth, which can be calculated as follows:

Cumulative share of incomeSecond lowest fifth=[Percentage of incomeLowest fifth+Percentage of incomesecond Lowest fifth]=17.7+19.9=37.6

Thus, the cumulative share of income for the second lowest fifth is calculated to be 37.6 percent. Similarly, the cumulative share of income can be calculated, and the table can be completed as follows:

	A		B
Percentage of families	Percentage share	Cumulative share	Percentage share	Cumulative share
Lowest fifth	17.7%	17.7%	9.0%	9.0%
Second lowest fifth	19.9	37.6	14.2	23.2
Middle fifth	20.4	58.0	17.5	40.7
Second highest fifth	20.7	78.7	21.9	62.6
Highest fifth	21.3	100.0	37.4	100.0

Economics Concept Introduction

Income Inequality: The income inequality is the situation where most of the national income of the economy would be produced by a small percentage of the population, whereas the minor portion of the national income would be accounted by the largest portion of the population. Thus, there will be a highest concentration of wealth in a few people in the economy.

(b):

To determine

Lorenz curve of the economy.

(b):

Expert Solution

Explanation of Solution

The Lorenz curve is the graphical illustration of the distribution of wealth in the economy. It is drawn on the cumulative percentage of income against the cumulative percentage of the population. Thus, it shows the cumulative shares of income received by the family. Thus, based on the table above, the Lorenz curve can be constructed as follows:

Economics For Today, Chapter 12, Problem 1SQP

(c):

To determine

Country with more equal distribution of income.

(c):

Expert Solution

Explanation of Solution

From the Lorenz curve diagram, it can be identified that the line that lies more close to the line of equality has more equal distribution of income. From the diagram, it is identified that Lorenz curve of Country A is closest to the line of equality and thus, Country A has more equal income distribution.

Answer 6

Chapter 12, Problem 1SQP

(a):

To determine

Cumulative distribution of income.

(a):

Expert Solution

Explanation of Solution

The economic development is achieved when the economic price increases per head of the population in the economy. The unequal distribution of the economic price between the people in the economy causes the income inequality in the economy. The income inequality is the situation in the economy in which the major part of the income will be earned by a smaller proportion of the population and vice versa.

The cumulative share of income can be easily calculated by adding the share of income with each preceding level's cumulative share of income. Here, in this case, the percentage share of income for A for the lowest fifth is 17.7 percent. Since there are no preceding levels, the cumulative share would remain the same as 17.7 percent. The percentage share of income for the second lowest fifth is 19.9 percent. Thus, the cumulative share of the second lowest fifth will be summation of the percentage share of both lowest fifth and second lowest fifth, which can be calculated as follows:

Cumulative share of incomeSecond lowest fifth=[Percentage of incomeLowest fifth+Percentage of incomesecond Lowest fifth]=17.7+19.9=37.6

Thus, the cumulative share of income for the second lowest fifth is calculated to be 37.6 percent. Similarly, the cumulative share of income can be calculated, and the table can be completed as follows:

	A		B
Percentage of families	Percentage share	Cumulative share	Percentage share	Cumulative share
Lowest fifth	17.7%	17.7%	9.0%	9.0%
Second lowest fifth	19.9	37.6	14.2	23.2
Middle fifth	20.4	58.0	17.5	40.7
Second highest fifth	20.7	78.7	21.9	62.6
Highest fifth	21.3	100.0	37.4	100.0

Economics Concept Introduction

Income Inequality: The income inequality is the situation where most of the national income of the economy would be produced by a small percentage of the population, whereas the minor portion of the national income would be accounted by the largest portion of the population. Thus, there will be a highest concentration of wealth in a few people in the economy.

Answer 7

Chapter 12, Problem 1SQP

(a):

To determine

Cumulative distribution of income.

Answer 8

(a):

Expert Solution

Explanation of Solution

The economic development is achieved when the economic price increases per head of the population in the economy. The unequal distribution of the economic price between the people in the economy causes the income inequality in the economy. The income inequality is the situation in the economy in which the major part of the income will be earned by a smaller proportion of the population and vice versa.

The cumulative share of income can be easily calculated by adding the share of income with each preceding level's cumulative share of income. Here, in this case, the percentage share of income for A for the lowest fifth is 17.7 percent. Since there are no preceding levels, the cumulative share would remain the same as 17.7 percent. The percentage share of income for the second lowest fifth is 19.9 percent. Thus, the cumulative share of the second lowest fifth will be summation of the percentage share of both lowest fifth and second lowest fifth, which can be calculated as follows:

Cumulative share of incomeSecond lowest fifth=[Percentage of incomeLowest fifth+Percentage of incomesecond Lowest fifth]=17.7+19.9=37.6

Thus, the cumulative share of income for the second lowest fifth is calculated to be 37.6 percent. Similarly, the cumulative share of income can be calculated, and the table can be completed as follows:

	A		B
Percentage of families	Percentage share	Cumulative share	Percentage share	Cumulative share
Lowest fifth	17.7%	17.7%	9.0%	9.0%
Second lowest fifth	19.9	37.6	14.2	23.2
Middle fifth	20.4	58.0	17.5	40.7
Second highest fifth	20.7	78.7	21.9	62.6
Highest fifth	21.3	100.0	37.4	100.0

Answer 9

(a):

Expert Solution

Answer 10

(a):

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Income Inequality: The income inequality is the situation where most of the national income of the economy would be produced by a small percentage of the population, whereas the minor portion of the national income would be accounted by the largest portion of the population. Thus, there will be a highest concentration of wealth in a few people in the economy.

Answer 13

(b):

To determine

Lorenz curve of the economy.

(b):

Expert Solution

Explanation of Solution

The Lorenz curve is the graphical illustration of the distribution of wealth in the economy. It is drawn on the cumulative percentage of income against the cumulative percentage of the population. Thus, it shows the cumulative shares of income received by the family. Thus, based on the table above, the Lorenz curve can be constructed as follows:

Economics For Today, Chapter 12, Problem 1SQP

Answer 14

(b):

To determine

Lorenz curve of the economy.

Answer 15

(b):

Expert Solution

Explanation of Solution

The Lorenz curve is the graphical illustration of the distribution of wealth in the economy. It is drawn on the cumulative percentage of income against the cumulative percentage of the population. Thus, it shows the cumulative shares of income received by the family. Thus, based on the table above, the Lorenz curve can be constructed as follows:

Economics For Today, Chapter 12, Problem 1SQP

Answer 16

(b):

Expert Solution

Answer 17

(b):

Expert Solution

Answer 18

Expert Solution

Answer 19

(c):

To determine

Country with more equal distribution of income.

(c):

Expert Solution

Explanation of Solution

From the Lorenz curve diagram, it can be identified that the line that lies more close to the line of equality has more equal distribution of income. From the diagram, it is identified that Lorenz curve of Country A is closest to the line of equality and thus, Country A has more equal income distribution.

Answer 20

(c):

To determine

Country with more equal distribution of income.

Answer 21

(c):

Expert Solution

Explanation of Solution

From the Lorenz curve diagram, it can be identified that the line that lies more close to the line of equality has more equal distribution of income. From the diagram, it is identified that Lorenz curve of Country A is closest to the line of equality and thus, Country A has more equal income distribution.