Consider a 100-person economy, where half of the population receives 20% of the total income and the other half the remaining 80%. Using the Lorenz-curve approximation, what is the Gini coefficient in this economy (please use the comma to seprare decimals, such as: x,y)?
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Consider a 100-person economy, where half of the population receives 20% of the total income and the other half the remaining 80%. Using the Lorenz-curve approximation, what is the Gini coefficient in this economy (please use the comma to seprare decimals, such as: x,y)?
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- By finding the ___________, Gini Coefficient is determined/calculated. a. difference between the richest and poorest of the population b. area between a Lorenz curve and the line of absolute equality c. percentage of the population living on more than $1 a day d. proportion of the population with more than a primary education e. percentage of the population living on less than $1 a dayA Gini coefficient of 0.15 would indicate that a society’s distribution of income is: A. PERFECTLY EQUAL B. RELATIVELY EQUAL C. MODERATELY UNEQUAL D. VERY UNEQUAL E. THE MOST UNEQUAL POSSIBLEQuestions Explain three methods of measuring the income inequality of a nation? 1.kuznet ratio 2. Lorenz curve 3. Gini coefficient As in the case of income distribution, calculation of wealth distribution is done by different entities using different measurements, resulting in a disparity in outcomes. In fact, commonly, wealthis narrowly defined as financial wealth—namely, cash on handand the money value of tangible and nonliquid assets. Even justthe market valuation of financial portfolios is commonly used todefine financial wealth. However, some may extend the definitionto include the value of income streams and insurance rights that,for the most part, cannot be transacted or encumbered. Theseinclude Medicare, Medicaid, and Social Security. When suchtransfers and public assistance are included, the poor and manyelderly could benefit, reducing the wealth disparity (Galbraith2016). To obtain net wealth, the value of the debts are subtractedsubtracted from the value of the assets.…
- When the Lorenz curve lies above thediagonal,a. the poorest 20 percent of the populationreceive more than 20 percent of income.b. the richest 20 percent of the populationreceive more than 20 percent ofincome.c. everyone receives the same income.d. the curve is wrong because it is impossible forthe graph to look like this.True or false: An increase in the share of income earned by the top half of the income distribution implies that the bottom half’s share and per capita income both decreased. (Be sure to address both “share” and “per capita income.”).. Consider two communities. In one community,ten families have incomes of $100,000 each and tenfamilies have incomes of $20,000 each. In the othercommunity, ten families have incomes of $250,000each and ten families have incomes of $25,000 each.a. In which community is the distribution of incomemore unequal? In which community is theproblem of poverty likely to be worse?b. Which distribution of income would Rawls prefer?Explain.c. Which distribution of income do you prefer?Explain.d. Why might someone have the oppositepreference?
- Q8.2) Lorenz CurveA curve illustrating the degree of equality of income distribution in an economy. It plots thecumulative percentage of income received by cumulative shares of the population. Where dowe fare as a country on the Lorenz curve and what does it say about South Africa’s incomedistributionSuppose a Lorenz curve for a particular country is f(x)=x^2for 0≤x≤1. What is the Gini index of income concentration for this country? Give your answer to the nearest integerWhich of the following statements regarding the Gini coefficient are correct? A. It is the measure of the average difference in income between every pair of individuals in the population. B. It can be calculated exactly as g=A/(A+B), where A is the area between the Lorenz curve and the 45-degree line, and A + B is the area under the 45-degree line. C. The fraction A/(A+B) is an accurate approximation when the population is small. D. If 50% of a large population owned 2% of the wealth each, then the Gini coefficient equals 0.6.
- Q8.4) Formula for Gini Coefficient from Lorenz CurveA / A + BWhat does the A and B represent?Questions Explain three methods of measuring the income inequality of a nation? Page 3 other 2 pages in the pic As in the case of income distribution, calculation of wealth distribution is done by different entities using different measurements, resulting in a disparity in outcomes. In fact, commonly, wealthis narrowly defined as financial wealth—namely, cash on handand the money value of tangible and nonliquid assets. Even justthe market valuation of financial portfolios is commonly used todefine financial wealth. However, some may extend the definitionto include the value of income streams and insurance rights that,for the most part, cannot be transacted or encumbered. Theseinclude Medicare, Medicaid, and Social Security. When suchtransfers and public assistance are included, the poor and manyelderly could benefit, reducing the wealth disparity (Galbraith2016). To obtain net wealth, the value of the debts are subtractedsubtracted from the value of the assets. Galbraith stated…Give some examples of how Lorenz curves and Gini coefficients can be used as summary measures of equality and inequality in a nation's distribution of income.
