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Income distribution. The government of a small country is planning sweeping changes in the tax structure in order to provide a more equitable distribution of income. The Lorenz curves for the current income distribution and for the projected income distribution after enactment of the tax changes are as follows:
Find the Gini index of income concentration for each Lorenz curve. Will the proposed changes provide a more equitable income distribution? Explain.
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- initial Investmen 11. The minimum wage has been rising steadily since 1970. The line y = 0.14x +1.83 models the minimum wage for x years past 1970. and means that for every year past 1970, the a) The slope of this equation is minimum wage has increased b) What was the minimum wage in 1970? c) According to the trend line equation, the minimum wage in 1987 wasarrow_forward1.2. In order to prepare the dataset for modelling, it became clear that RATIO repeats with similar values. The analyst decided to regard them also as categorical variables. Amend the dataset fully in order to build a regression model. Use an ascending order in the coding structure. 1.3. Show the new amended data set and formulate the regression model that must be estimated. Apply all the changes done to the dataset in Question 1.2 and give the regression function. 1.4. The estimated response function is obtained using the coding structure of Question 1.2. Ŷ = 1.34 + 0.034X₁ + 0.049 X₂ -0.041 X3 + 0.029X4 +0.011 X5 +0.08X6. Explain the regression coefficients b₁, b, and b. 1.5. Find the fitted response function for the rotational METHOD of farming on a farm with RATIO of 0.8. 1.6. Refer to Question 1.5. The analyst has a suspicion that there is interaction between the size and the age of the farm if the method of farming is rotational and the field/land ratio is 0.8. Give the response…arrow_forwardThe income of farmers depends on various factors. To predict the income of the next year, a study was undertaken and data was gathered considering as many as possible factors that might influence the yearly income. Regression methods are used to create such a prediction function, that is, we want to predict the profit for the next year. The following were determined. X₁ = SIZE - farm size recorded x 1000 hectares X₂ = AGE - how long the farm has been in operation in years X3 = RATIO - the ratio ofland size to field size recorded as 0.5, 0.75, 0.8 and 0.9 X4 = METHOD - rotational and non rotational method of planting Ŷ INCOME the income per year recorded in x R 1 000 000.00 The partial dataset is as follows INCOME Y 1.3 2.4 3.2 1.5 2.1 a. C. Sample Quantiles 18 15 1.0- 0.8- 0.6- 04- 0.2- 0.0- SIZE X₁ 25 5 8 2 1.2 1.5 Predicted Theoretical Quantiles 45 AGE X₂ 50 20 1.1. The analyst did some exploratory analysis and below are some of the residual plots he constructed. Study the plots and…arrow_forward
- The income of farmers depends on various factors. To predict the income of the next year, a study was undertaken and data was gathered considering as many as possible factors that might influence the yearly income. Regression methods are used to create such a prediction function, that is, we want to predict the profit for the next year. The following were determined. X₁ = SIZE - farm size recorded x 1000 hectares X₂ = AGE - how long the farm has been in operation in years X3 = RATIO- the ratio of land size to field size recorded as 0.5, 0.75, 0.8 and 0.9 X4 = METHOD - rotational and non rotational method of planting Ŷ = INCOME the income per year recorded in x R 1 000 000.00 The partial dataset is as follows INCOME Y 1.3 2.4 3.2 1.5 2.1 a. C. Standardized Residual Sample Quantiles 15 20 1.0- 0.8- 0.6- 04- 02- 0.0- SIZE X₁ 25 5 8 2 1.2 1.5 Predicted Theoretical Quantiles 45 AGE X₂ 2 20 100 1.1. The analyst did some exploratory analysis and below are some of the residual plots he…arrow_forwardThe following data give the yearly inflation rate and money supply growthrate (both measured in percentage) for 51 countries. A simple regression of Infla-tion on Growth yields the following information from RegressIt output: (a) What is the linear relationship implied by these data? (b) For a country with an 6% money supply growth, what would be theexpected inflation? (This means Growth= 6 as it is measured in percentage.) (c) A simplistic monetarist claims that a 1% increase in the money supplygrowth rate would result in a corresponding 1% increase in inflation. In otherwords, for the relationship of Inflation = β0 + β1Growth, the null hypothesis isβ1 = 1. Do the regression results support this null hypothesis?arrow_forwardClassify the following variables as quantitative or qualitative variables. If the variable is quantitative, identify whether it is discrete or continuous._______________ _______________ 1. The type of payment used by customers_______________ _______________ 2. The evaluation rating of instructors_______________ _______________ 3. The classification of employees in company _______________ _______________ 4. The weekly allowance of students_______________ _______________ 5. The length of telephone calls made by students to their parentsarrow_forward
- Between 2000 and 2010, the use of opioids was exploding in the USA. We use MME (Morphine Milligram Equivalents) as a measure of doses used. It went from 85.3 billion doses in 2000 to a level 164% higher in 2009. Assuming a linear trend (billion of doses as a function of years t), what is the vertical intercept of the linear function of the use of opioids, in billion? Assume that t=0 in 2003. If needed, round your answer to 2 digits after the decimal point. Answer:arrow_forwardREAL CONSUMPTION (Billions of dollars) REAL CONSUMPTION (Billions of dollars) The following graphs show an economy's initial position at point A along its consumption function (C). Suppose tensions in the Middle East lead to a rapid increase in the price of oil, which raises the general price level. On the graph, shift either the consumption curve or the initial point on the consumption function to show the impact of a rise in the price level (Note: In the scenario where the curve shifts, only shift the curve and do not adjust the position of the point.) REAL DISPOSABLE INCOME (Billions of dollars) Now suppose that disposable income suddenly and unexpectedly decreases. A On the following graph, shift either the consumption curve or the initial point on the consumption function to show the impact of a fall in disposable income. (Note: In the scenario where the curve shifts, only shift the curve and do not adjust the position of the point.) REAL DISPOSABLE INCOME (Billions of dollars) Carrow_forwardOhio Swiss Milk Products manufactures and distributes ice cream in Ohio, Kentucky, and West Virginia. The company wants to expand operations by locating another plant in northern Ohio. The size of the new plant will be a function of the expected demand for ice cream within the area served bythe plant. A market survey is currently under way to determine that demand. Ohio Swiss wants to estimate the relationship between themanufacturing cost per gallon and the number of gallons sold in a year to determine the demand for ice cream and, thus, the size of the new plant. The following data have been collected:a. Develop a regression equation to forecast the cost per gallon as a function of the number of gallons produced.b. What are the correlation coefficient and the coefficient of determination? Comment on your regression equation in light of these measures.c. Suppose that the market survey indicates a demand of 325,000 gallons in the Bucyrus, Ohio area. Estimate the manufacturing cost per…arrow_forward
- 7. The average cost of a meal prepared outside of the home was $12.96 in October 2020 and isincreasing at a rate of $0.71 per year. (a) Create a model for this situation. (Recall that you should define the independent anddependent variables and their units, as well as provide an equation.) (b) If this trend continues, what will be the average cost of a meal in April 2023?arrow_forwardUse this data and and generate a model of the annual maintenance expenses based on the age of the bug. If my bus is 4.1 years old, what are the projected annual maintenance costs? (Enter a whole number) Age of Bus (years) Annual Maintenance Cost ($) 2.4 350 2.3 370 2.4 480 3.1 520 3 590 5.8 550 4.8 750 3.8 800 3.6 790 4.9 950 5.5 915arrow_forwardOnly need help with question “c”arrow_forward
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