Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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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.
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Chapter 18 Solutions
Principles of Economics (12th Edition)
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- 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_forwardThe graph shows a Lorenz curve for an economy with a total income of 30000; Share of Income A B = C DE I 20% 40% 60% 80% 100% suppose that A=100%, b=48%, c=23%, D=9% and E=2% Percentile How much income is earned by each quintile? (Just enter the number without $ sign) Hint: You know the total income in this economy (30000) you need to use this number in your calculations Quintile 1 (poorest) = type your answer... Quintile 2 = type your answer... type your answer... Quintile 3 Quintile 4 =arrow_forward
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