Answered: 10) What does a Lorenz curve show? Show…

10) What does a Lorenz curve show? Show a Lorenz curve for a country like the USA where there is a difference between income of the population.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter18: Poverty And Redistribution

Section: Chapter Questions

Problem 1.2P

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10) What does a Lorenz curve show? Show a Lorenz
curve for a country like the USA where there is a
difference between income of the population.

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If a country had perfect income equality what would the Lorenz curve look like?
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Table 15.9 shows the share of income going to each quintile of the income distribution for the United Kingdom in 1979 and 1991. Use this data to calculate what the points on a Lorenz curve would be, and sketch the Lorenz curve. How did inequality in the United Kingdom shift over this time period? How can you see the patterns in the quintiles in the Lorenz curves?