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.
The table below shows the annual incomes of the only residents of two countries A and...
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