Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 20, Problem 1MCQ
To determine
Correct statement
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Differentiate size distribution and functional distribution of income.
What is a "quintile"? Provide and explain one example of how this concept is used in the discussion of income distribution.
Use the table related to the size distribution of household income to answer the following questions.
Share of Total
Income
Income Group
Highest fifth
Second fifth
Third fifth
2019 Income
Above $142,000
$86,001-$142,000
$54,001-$86,000
Average Income
$ 254,400
51.9%
111,100
22.7
68,900
14.1
Fourth fifth
Lowest fifth
$28,001-$54,000
0-$28,000
40,700
8.3
15,300
3.1
ok
According to the table:
ences
Instructions: In part a, enter your response as a whole number. In part b, round your response to one decimal place.
a. What is the average household income in the United States?
98080
b. What percentage of the average household income of people in the highest fifth would have to be taxed away to bring them down
to that average?
%
Chapter 20 Solutions
Foundations of Economics (8th Edition)
Ch. 20 - Prob. 1SPPACh. 20 - Prob. 2SPPACh. 20 - Prob. 3SPPACh. 20 - Prob. 4SPPACh. 20 - Prob. 5SPPACh. 20 - Prob. 6SPPACh. 20 - Prob. 7SPPACh. 20 - Prob. 8SPPACh. 20 - Prob. 9SPPACh. 20 - Prob. 1IAPA
Ch. 20 - Prob. 2IAPACh. 20 - Prob. 3IAPACh. 20 - Prob. 4IAPACh. 20 - Prob. 5IAPACh. 20 - Prob. 6IAPACh. 20 - Prob. 7IAPACh. 20 - Prob. 8IAPACh. 20 - Prob. 9IAPACh. 20 - Prob. 10IAPACh. 20 - Prob. 11IAPACh. 20 - Prob. 1MCQCh. 20 - Prob. 2MCQCh. 20 - Prob. 3MCQCh. 20 - Prob. 4MCQCh. 20 - Prob. 5MCQCh. 20 - Prob. 6MCQCh. 20 - Prob. 7MCQ
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- economicarrow_forwardTable: Income Distribution in Four Countries provides recent data from the World Bank on the distribution of income in four countries. Percent income top quintile Percent income middle three quintiles combined O Bangladesh. Costa Rica. Table: Income Distribution in Four Countries Bangladesh El Salvador 41.4% 46.4% O Mexico. 50.0% 47.7% 8.6% Percent income bottom quintile Based on the data, the country with the distribution of income that is closest to equal is: El Salvador. Mexico 50.1% 5.9% 44.2% Costa Rica 54.0% 5.7% 41.8% 4.2%arrow_forwardConsider the following table with individuals in a country and their incomes: Individuals Income 1 15 30 4 45 55 6 70 7 85 8. 100 115 10 130 Total 650 O The ratio of income received by the top decile to the bottom quintile is 3.5. O The ratio of income received by the top decile to the bottom quintile is 7.3. O The ratio of income received by the top decile to the bottom quintile is 4.3. O The ratio of income received by the top decile to the bottom quintile is 6.5.arrow_forward
- The values in the table reflect the percentages of pre-tax-and transfer income. 22. Refer to Table 20-1. The trend in income inequality from 1980 to 2010 is 23. Refer to Table 20-1. If the distribution of income were completely equal, what percentage of income would the bottom fifth of the population earn? 24. A government policy aimed at protecting people against the risk of adverse events is calledarrow_forwardInstructions: Use the interactive tool to plot Lorenz curves for the information in the table. Quintile 1st % of Income, United States, 5 2010 % of Income, Bangladesh, 2010 9 2nd 10 13 3rd 14 16 United States data from Census.gov, before-tax income, rounded to 1/100ths. Data for Bangladesh from WorldBank.org, rounded to 1/100ths. 4th 20 21 5th 51 41 Report your answers to two decimal places. According to these data, the Gini coefficient for the United States in 2010 is The Gini coefficient for Bangladesh in 2010 is These data indicate that in 2010, income inequality is (Click to select) in the United States compared to Bangladesh.arrow_forwardSLO-4.1. The amount of money people have to spend after buying necessities such as food, clothing and housing is Osavings Odiscretionary income Onet income Ogross incomearrow_forward
- The following income distribution data are for Brazil. Quintile Percent Share Lowest 20% 3.0% Second quintile 6.9% Third quintile 11.8% Fourth quintile 19.6% Highest 20% 58.7% Highest 10% 43.0% a. Carefully graph the Lorenz curve, labeling the axes. b. Brazil’s national income is about $300 billion. What is the approximate dollar income of the bottom 20%? Bottom 40%?arrow_forwardK A Lorenz curve plots the A. percentage of total income received by each quintile against the percentage of households in the quintile OB. trend in the cumulative percentage of income received by each quintile against trend in the number of households O C. average income received by each quintile against the number of households in the quintile O D. cumulative percentage of income against the cumulative percentage of households Nextarrow_forward4Plz help4arrow_forward
- Define the term median income?arrow_forward23. Arnold, Betty, Christine, Donald, and Elena receive incomes of $0, $400, $200, $100, and $300. Starting with the top 20% of the population, write in the correct income share in percentages. Then in a line below it, write in the income share for the second 20%. In another line write in the income share for the middle 20%, then on another line, the income share for the fourth 20%, and finally the income share for the bottom 20%. Please state your answers in percentages for full credit. You do not have to show your calculation. population share income share top 20% ______________ 2nd 20% ______________ mid 20% _____________ 4th 20% _____________ bottom 20% _____________ 24. Based on your answers in question #23, fill in the cumulative income distribution table using percentages. Please start with…arrow_forwardquintile cumulativeshare of households a cumulative share of income b cumulative share of income poorest 10.5 2.5 2nd 13.2 6.8 middle 21.6 13.9 4th 26.4 24.2 richest 28.3 52.6arrow_forward
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