MICROECONOMICS
MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
Question
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Chapter 18, Problem 2QAP

(a)

To determine

The wealth distribution of Americans.

(b)

To determine

Role of government in wealth distribution.

(c)

To determine

Teachings of both testaments regarding the private individual’s behavior.

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4. a. Draw, on the same graph, a Lorenz curve representing Perfect income equality Perfect income inequality i. ii. ii. A typical rich country with a lot of redistribution A typical middle-income country with little redistribution b. Consider a country that makes its social support programs (like “food stamps", insurance, or programs that provide goods like housing or health care to the poor) more generous, while taxing the rich more in order to fund the programs. How will that economy's Lorenz curve change? c. Suppose a country becomes richer, such that over 10 years, every person's income exactly doubles. What happens to that economy's Lorenz curve? iv. unemployment
= 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. CID Lotteries result in the distribution of income OA. becoming more unequal OB. becoming more equal OC. remaining unchanged 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 drag it. Cumulative percentage of income 100- 80- 60- 0 20 40 60 80 100 Cumulative percentage of households >>> Draw only the objects specified in the question. 40- 20-
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