Microeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859484
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
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Question
Chapter 19, Problem 14E
To determine
To explain:
The relationship between the Lorenz curve and Gini coefficient.
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Explain how the Gini coefficient is derived from the Lorenz curve by making use of the graph provided;
Refer to the graph to answer this question.
Explain the Lorenz Curve.
What is the Lorenz Curve and how do you use it to calculate a Gini coefficient?
Chapter 19 Solutions
Microeconomics (MindTap Course List)
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Similar questions
- What is measured on the two axes of a Lorenz curve?arrow_forwardIf a country had perfect income equality what would the Lorenz curve look like?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_forward
- Here is one hypothesis: A well-funded social safety net can increase economic equality but will reduce economic output. Explain why this might be so, and sketch a production possibility curve that shows this tradeoff.arrow_forwardBelow is a Lorenz Curve for a given country. Suppose its government establishes a 10% income tax on persons earning more than $500,000/year and uses the proceeds to subsidize secondary education. Show how the tax would affect income inequality by drawing the new Lorenz Curve.arrow_forward1. Consider an illustrative economy with the following five incomes: {10, 15, 25, 45, 50}. Calculate the Gini coefficient. Construct a table with the values for the Lorenz curve (use 20%, 40%, 60%, 80%, 100% thresholds).arrow_forward
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