Question

B. Measuring Poverty - Person City A City B T03 456 120 250 300 120 250 300 1310 1350 1310 1350 1500 B 5 00 800 990 1400 1500 2000 Assume that the poverty line is $1300. For each city calculate the following: (a) The Poverty Head Count (HC) (b) The Poverty Gap Index (PGI). (c) In terms of poverty, is one country better off than the other? Explain why or why not in terms of the HC and PGI?

Answer 1

City A

The Poverty head Count is 3

City B

The Poverty HeadCount is 3.

The formula for calculating PGI is

1/ΝΣ(a – )/2)

N is the total population

Z is the Poverty line

Y_{j is the income of the poor.}

_{By using this formula}

_{The PGI of City A is}

_2857.9

_{The PGI of City B is}

_2857.9

_{The City B is in a better position}