ECON MICRO (with ECON MICRO Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
5th Edition
ISBN: 9781305631946
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 18, Problem 1.2P
To determine
The Lorenz Curve with its significance.
Concept Introduction:
Lorenz curve - It is the graphical representation of income inequality.
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15. __________________________________________ poverty is the minimum level of subsistence that no family should be expected to live below.
13. The Lorenz curve
A) has non-decreasing gradient
B) cannot have straight line segments
C) none of the answers
D) can cross the 45 degree line
A5.
Suppose that the initial rural distribution of income is (1, 2, 3, 4) while the initial urban distribution is (3, 4). The poverty line is 2, so the overall poverty rate (headcount index) is 1/3. Now imagine that all of the rural poor move to urban areas and each of them gains 20% in real income. Verify that the overall poverty rate falls to 1/6, yet the urban poverty rate rises from zero to 1/4.
Chapter 18 Solutions
ECON MICRO (with ECON MICRO Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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- How does the poverty trap discourage people from working?arrow_forwardTable 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?arrow_forward4.7) Consider a national income tax that is structured as follows: Income Marginal tax rate $0-$10,000 0% $10,001-- $60,000 5% $60,001and above 0% For each of the following workers determine his or her marginal and average tax rate. a. A part-time worker with an annual income of $9,000. b. A retail sales person with an annual income of $45,000. c. An advertising executive with an annual income of $600,000arrow_forward
- 1. How does the population of a low-income country such as Ethiopia differ from that of a high-income nation such as the United States in terms of poverty? Do you think the people living in high-income nations have a responsibility to address poverty in the rest of the world ? If so, why? If not, why not?arrow_forward(c) Draw the Lorenz curve.arrow_forwardWhat are some reasons why a certain degree of inequality of income would be expected in a market economy?arrow_forward
- What is the difference between poverty and income inequality?arrow_forwardIdentify some public policies that can reduce the level of economic inequality.arrow_forwardMany critics of government programs to help low-income individuals argue that these programs create a poverty trap. Explain how programs such as TANF, EITC, SNAP, and Medicaid will affect low-income individuals and whether or not you think these programs will benefit families and children.arrow_forward
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