Homework Answers
To construct Lorenze curve from a group of 5 people, order income of people from lowest to highest (as in the below tables):
Country A:
| Population % | Cumulative % of Population | Income A | Cumulative Income A | Cumulative % Income A | |
| 0.00% | 0% | 0 | 0 | 0 | 0.00% |
| (1/5)*100 = 20% | 20% | 20 | 20 | (20/1125)*100 = | 1.78% |
| (1/5)*100 = 20% | 40% | 25 | 45 | (45/1125)*100 = | 4.00% |
| (1/5)*100 = 20% | 60% | 30 | 75 | (75/1125)*100 = | 6.67% |
| (1/5)*100 = 20% | 80% | 50 | 125 | (125/1125)*100 = | 11.11% |
| (1/5)*100 = 20% | 100% | 1000 | 1125 | (1125/1125)*100 = | 100.00% |
Country B:
| Population % | Cumulative % of Population | Income B | Cumulative Income B | Cumulative % Income B | |
| 0.00% | 0% | 0 | 0 | 0 | 0.00% |
| (1/5)*100 = 20% | 20% | 40 | 40 | (40/2250)*100 = | 1.78% |
| (1/5)*100 = 20% | 40% | 50 | 90 | (90/2250)*100 = | 4.00% |
| (1/5)*100 = 20% | 80% | 60 | 150 | (150/2250)*100 = | 6.67% |
| (1/5)*100 = 20% | 100% | 100 | 250 | (250/2250)*100 = | 11.11% |
| (1/5)*100 = 20% | 60% | 2000 | 2250 | (2250/2250)*100 = | 100.00% |
As can be seen in the graph, Lorenz curves for both countries
(red and green) coincide which means that both countries have same
level of unequal income distribution.
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