Microeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859484
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
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Question
Chapter 19, Problem 1E
To determine
To state:
the concept of Lorenz curve and the shape of Lorenz curve when the income is equally distributed and would the curve bow upwards above the income equality line.
Expert Solution & Answer
Explanation of Solution
Lorenz curve:
is defined as a curve that measures the degree of inequality of income distribution of an economy.
When the income is equally distributed, the Lorenz curve will be a straight 45 degree line.
In case of a normal economy, the Lorenz curve will lie beneath it, presenting the reality of wealth distribution.
As per the definition, this curve cannot be bowed upward as the bottom 10% of incomes can't earn more than the top 90% of incomes.
Economics Concept Introduction
Lorenz curve:
is defined as a curve that measures the degree of inequality of income distribution of an economy.
In other words, it is defined as a graph on which the cumulative percentage of total
The degrees to which this curve sags below the straight line represents the degree of inequality in the distribution of income.
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Chapter 19 Solutions
Microeconomics (MindTap Course List)
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