1 Suppose that in country X the "bottom" 80% of the population receives 20% of the country's income. The "top" 20% receives the remaining 80% of the country's income. Draw the Lorenz curve for this country and the line of perfect equality (make sure to label your axis, curves, and points on the curves). 2 What is the Gini index in country X (show your math)? [Hint: Draw your Lorenz Curve and divide it into shapes for which you can use geometry to calculate the area.] 3 Suppose that country X has a population of 5,000 households. 4000 households have expenditure levels of $10,000, below the poverty line of $15,000, while the remainder of households have expenditures above the poverty line. What is the poverty headcount ratio for this country (show your work)? 4 What happens to inequality (no calculation needed, just the direction) and to the poverty rate (poverty headcount ratio) if the 4000 poor households transfer $2,500 on net (through the tax system) to the richer households? Does the poverty headcount ratio satisfy the Dalton-Pigou transfer rule? Does the Gini coefficient?
1 Suppose that in country X the "bottom" 80% of the population receives 20% of the country's income. The "top" 20% receives the remaining 80% of the country's income. Draw the Lorenz curve for this country and the line of perfect equality (make sure to label your axis, curves, and points on the curves). 2 What is the Gini index in country X (show your math)? [Hint: Draw your Lorenz Curve and divide it into shapes for which you can use geometry to calculate the area.] 3 Suppose that country X has a population of 5,000 households. 4000 households have expenditure levels of $10,000, below the poverty line of $15,000, while the remainder of households have expenditures above the poverty line. What is the poverty headcount ratio for this country (show your work)? 4 What happens to inequality (no calculation needed, just the direction) and to the poverty rate (poverty headcount ratio) if the 4000 poor households transfer $2,500 on net (through the tax system) to the richer households? Does the poverty headcount ratio satisfy the Dalton-Pigou transfer rule? Does the Gini coefficient?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter12: Income Distribution, Poverty, And Discrimination
Section: Chapter Questions
Problem 17SQ
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