Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 2.3P
To determine
Calculate the values of share of income and cumulative share of income and draw the Lorenz curve.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
What is the Lorenz Curve and how do you use it to calculate a Gini coefficient?
How does the poverty cycle differ between rural and urban areas?
Below is a Lorenz Curve for a given country. Suppose its government establishes a 10% income tax on persons earning more than $500,000/year and uses the proceeds to subsidize secondary education. Show how the tax would affect income inequality by drawing the new Lorenz Curve.
Chapter 18 Solutions
Principles of Economics (12th Edition)
Knowledge Booster
Similar questions
- Use the following information to calculate poverty rates for the following two countries, Woolandia and Narnia. Set the poverty line equal to $365. Calculate the Headcount Index measure of poverty for each country. What does this tell you (or not tell you) about poverty in the countries?arrow_forwardExplain Lorenz curve in short witha diagramarrow_forwardThe table below shows the share of income going to each quintile of the income distribution for a nation in 1955 and 2015. Use this data to calculate what the points on a Lorenz curve would be, and sketch the Lorenz curve. The purple line represents 1955. The green line represents 2015.arrow_forward
- 1arrow_forwardUse the following information to calculate poverty rates for the following two countries, Woolandia and Narnia. Set the poverty line to $365. What is the Poverty Gap Index for each country? What does this measure tell you that is different from the headcount index?arrow_forwardThe table below shows the share of income going to each quintile of the income distribution for a nation in 1995 and 2015. Use this data to calculate what the points on a Lorenz curve would be, and sketch the Lorenz curve. The purple line represents 1995. The green line represents 2015. Share of Income Received 1995 2015 Bottom 20% 10% 5% Bottom 40% 20% 15% Bottom 60% 45% 35% Bottom 80% 75% 70% All 100% 100% |100% Provide your answer below: 110 100 -90 -80 A90, 70) 70 (100, 70) -60 Perfect Equality (100,50 Year 2015 50 (80,50) Year 1995 40 (70, 30) 30 (50, 20) 20 (90 20) 10 (60 10) 20 40 60 80 100 Income Quintiles -10 Cumulative Share of Income To oarrow_forward
- Using the above Lorenz Curve, answer the following questions. . . Approximately what percentage of the income does the richest 20% of Country B earn? Approximately what percentage of the income does the poorest 20% of Country A 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?arrow_forwardThe graph shown below illustrates the Lorenz Curves in Country X and Country Y in 2021. Note that the Lorenz Curve for Country Y starts out below but eventually intersects and passes above the Lorenz Curve for Country X. These curves provide a graphical illustration of the _____________ in each country. CFI 1 0 B scope of government redistribution distribution of income level of welfare benefits poverty rate "County X" Lorenz Curve -"County Y" Lorenz Curve CFParrow_forwardWhat do you think about the income trap - is it a myth or reality? How does the middle-income trap affect the equality and poverty of citizens? What can be done to avoid or escape from the trap? Answer correctly and explain within 40 mins will give you positive feedback.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning