Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 28, Problem 2QP
To determine
Comparing values of Gini coefficient between two countries and its income distribution.
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Imagine someone living close to the poverty
line in a developing country. This person runs
a small business filtering and selling water.
Her daughter gets sick, and she has to sell her
filtering machine to pay for treatment. Now
she makes very little money cleaning fish for a
local fishing cooperative. Graph her income
today versus her income tomorrow before her
daughter got sick. Explain your assumptions
with labels on the graph. Then graph what
happens to the equilibrium after her daughter
gets sick. Hint: this is an example of a trap.
Question 12
The following income distribution data are for Lesotho:
Quintile
Lowest 10%
Lowest 20%
Second quintile
Third quintile
Fourth quintile
Highest 20%
Percent Share
2.2%
3.0%
7.2%
12.5%
21.0%
56.3%
Explain how to find the Gini coefficient, graphically. (Hint: You might want to use labels on your
graph). You should be able to draw a graph on your computer, save it as a graph, picture, or
document, and upload that graph, picture, or document to your answer box. If you cannot do that,
you can always draw a graph on paper, take a picture, and upload the picture to your answer box.
Income inequalities exist in the U.S. What are some policy tools the government could use to try and equalize incomes between wealthier households and poorer households? Describe two policies. Have these policies been successful in the past? Why or why not ?
Chapter 28 Solutions
Economics (MindTap Course List)
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- I'm not sure if I am answering this question correctly, or how to graph it.arrow_forwardI am not sure which other ones to check off as an answer.arrow_forwarda. Is the presence of an underground economy likely to result in a Gini coefficient that overstates or understates poverty? b. Consider a simple economy where 90 percent of citizens report an annual income of $10,000 while the remaining 10 percent report an annual income of $110,000. What is the Gini coefficient associated with this economy? c. Suppose the poorest 90 percent of citizens actually have an income of $15,000 because each receives $5,000 of unreported income from the underground economy. What is the Gini coefficient now?arrow_forward
- The figure shows the distribution of pre-tax income for Canadian families in 2015. Distribution of Family Income, 2015 60- Which of the following best describes the distribution of pre-tax earnings? 50- A. Just over 40 percent of families earned less than $40,000 while just over 20 percent of families earned more than $100,000. 41.8% 40- 38.4% B. Nearly 40 percent of families earned less than $40,000 while just under 20 percent of families earned more than $100,000. O C. Just over 20 percent of families earned less than $40,000 while just over 40 percent of families earned more than $100,000. 30- 19.8% O D. Nearly 20 percent of families earned less than $40,000 while just under 40 percent of families earned more than $100,000. 20- 10- $40K to $100K Pre-tax Family Income < $40K $100K and over Percentage of Familiesarrow_forwardIs it possible for everyone's real income to rise even though the income distribution in a society has become more an equal? Give an example to support your answer.arrow_forward(a) Suppose that your professor asks you to compare China and India based on income inequality. Which measure would you use and explain how would you determine which country is doing better based on the chosen measure? (b) Suppose that your professor asks you to compare China and India based on economic development. Which measure would you use and explain how would you determine which country is dbing better based on the chosen measure?arrow_forward
- Choose a country of your choice and answer the following questions: I) is there any income inequality? Explain. ii) Is there a equality in income distribution?arrow_forwardIncomes in China and India are a small fraction of incomes in the United States. But incomes in China and India are growing more quickly those in the United States. Draw the world Lorenz curve before the growth in income in China and India. Label it Before. >>> Reposition the label by clicking on the edge of the label box and dragging it. Draw the world Lorenz curve after the growth in income in China and India. Label it After. Inequality between the people in China and India and the people in the United States is O A. increasing OB. staying relatively constant C. decreasing OD. increasing in some years and decreasing in other years % 5 6 Selected: none Oll 87 & 7 O * 8 O 100- 80- 60- 40- 20- 0 Cumulative percentage of income ( 9 20 40 80 60 Cumulative percentage of households >>> Draw only the objects specified in the question. Delete Clear * ? ) 0 Next x 10 an rld" it fe dust real- lesto SITI Oriente 1 C++ ( Camp.o NS 1 ye Coding hool Stu Mihailescu NS 2 year. ython - Fu ers [Tutoria…arrow_forward"How can Income Inequality in the United States be Reduced?"arrow_forward
- In a society with 240,000 households, 10,000 households earn $4 each, 4,000 households earn $2 each, 10,000 households earn $10 each, and the rest earn $1 each.What is the income share of the third quintile? (Not the cumulative income share, just the share of that quintile.) Please write down the answer with two decimal points in percentage form without the % sign. XX.xx, NOT XX.xx%arrow_forwardWhich one of the following is the most likely to be associated with an increase in the incidence of poverty? A) The Gini coefficient falls substantially. B) The number of single persons with children and of single pensioners has increased substantially. C) The real income of those in the top 20% of income earners falls by 10%. D) The number of people earning below the level of income support has decreased.arrow_forwardExplain how our economic transition is affecting the national income distribution.arrow_forward
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