Principles of Microeconomics California Edition 2nd Edition
2nd Edition
ISBN: 9780393622089
Author: Dirk Mateer, Lee Coppock
Publisher: W. W. Norton
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Question
Chapter 15, Problem 7SP
To determine
Determine the average output.
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Question 9
In Country X there are only two income levels: $10,000 and $40,000. Twenty million individuals earn the
low income and twenty million earn the high income. The Gini coefficient associated with this income
distribution is given by
0.70
0.30
0.35
0.65
Indicators of income inequality and poverty
Country
Gini coefficient
Australia
Belgium
Canada
France
Italy
Japan
Portugal
Spain
.336
259
.324
.293
.337
.329
.353
.317
Ratio of income at
90th percentile to
10th percentile
4.5
3.3
4.2
3.4
4.3
5.0
4.9
4.6
Poverty rates %
households below
50% of average
household
income
14.6
9.4
12.0
7.2
11.4
15.7
11.9
14.0
Source: OECD 2011
The table shows some selected indicators on income inequality and poverty. Based on these data, which
of the following statements are correct? Select one or more answers.
Select one or more:
The Gini coefficient for Canada means the bottom 10% of households have a greater total income
than the bottom 10% of households in Italy.
France has a lower overall level of income inequality than Japan.
The ratio between households at the 90th percentile and households at the 10th percentile
suggests inequality is greater in Australia than in Belgium.
Spain has a lower poverty rate than Portugal.
Which 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.
Chapter 15 Solutions
Principles of Microeconomics California Edition 2nd Edition
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