Lorenz Curve Essay

603 Words3 Pages
4. A.The net gain on social optimal price is when the government establishes the price at a socially optimal level of 10 cents. This causes the production to decrease, which leads to a decrease in consumer benefits. But on the other hand, the decrease in production will preserve and save the resources since they don't need as many materials/resources as before. The value of decreasing consumer benefits is less than the value of saving the resources. B.The net gain on above social optimal price is when the government establishes the price above the socially optimal level of 14 cents. This causes the production to decline below 35 million kilowatt hours per month, which leads to decreases in consumer benefits. But on the other hand, the decreases…show more content…
The Lorenz is a curve that demonstrates the variation of the distribution of income from a level of perfect equality. An example of such the Lorenz curve is presented in Figure A-1. In Figure A-1, Point A shows that the bottom 80% of the households earned a 56.3% of total income in 1980. Point B shows that the share of the total income going to the bottom 80% of the households happened to be lower in 2012 than it was in 1980. The Lorenz curve would be a straight line only if the income were evenly dispersed for all of the households. 9. In 1996, the Aid to Families with Dependent children legislation was substituted with the Temporary Assistance for Needy Family. The Temporary Assistance for Needy Family was a brand new welfare program that gives fixed grants from federal to state government and gave the states the authority to produce and plan their own welfare program. The Temporary Assistance for Needy Family has five years time limit/period so, for every 5 years, the state government would have to change the certain percentage of people from the welfare program to work. However, there are few states that have the reduce the time limit/period to be less than the five years time
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