How to do this Lorenz Curve problem?
There are 4 consumer groups of 4 quartiles. Find the share of income of each group for both A and B. Then use the population percentage, 0%, 25%. 50%, 75%, and 100% against the cumulative percentage of income. This is done below
Percent of population | Percent of income (A) | Percent of income (B) |
0 | ||
1st 25 | 9.52 | 13.64 |
2nd 25 | 11.90 | 22.73 |
3rd 25 | 19.05 | 27.27 |
4th 25 | 59.52 | 36.36 |
total = 100% | 100 | 100 |
We see that Lorenz curve for A lies below the Lorenz curve B implying that income inequality is more in A. Hence D is correct.
What is the Lorenz curve? What does the Lorenz curve in Exhibit 2 illustrate?
The greater the area between the Lorenz curve and the diagonal in the Lorenz curve diagram the: A: smaller is the Gini ratio and the greater is the degree of income inequality B: larger is the Gini ratio and the greater is the degree of income inequality C: smaller is the Gini ratio and the lesser is the degree of income inequality D: larger is the Gini ratio and the lesser is the degree of income inequality
1) Figure 2 below is an image of a Lorenz curve. a. (4) When the Lorenz curve sags lower, does that mean the economy is more equal or more unequal? b. (6) Explain how to use the information in Figure 2 to calculate the Gini coefficient 1. What is the typical range for Gini coefficients? ii. What does a high number indicate? 100 Perfect Equality Line Percentage of income Lorenz Curve 100 Percentage of Population Figure 2 2) (10) Describe...
1) Figure 2 below is an image of a Lorenz curve. a. (4) When the Lorenz curve sags lower, does that mean the economy is more equal or more unequal? b. (6) Explain how to use the information in Figure 2 to calculate the Gini coefficient. i. What is the typical range for Gini coefficients? ii. What does a high number indicate? 100 Perfect Equality Line Percentage of Income Lorenz Curve 100 Percentage of Population Figure 2 2) (10) Describe...
Previous question, Lorenz curve numbers: 4) According to the Lorenz curve that you found in the previous question, calculate the Gini index for both the US and China. US China Percent. of Pop first 25% Second 25% Third 25% fourth 25% 5% 15% 5% 20% 30% 40% 50% 35%
1) Figure 2 below is an image of a Lorenz curve. a. (4) When the Lorenz curve sags lower, does that mean the economy is more equal or more unequal? I i. What does a high number indicate? b. (Explain how to use the information in Figure 2 to calculate the Gini coefficient. i. What is the typical range for Gini coefficients? ii. What does a high number indicate? 100 Perfect Equality Line Percentage of Income Lorenz Curve 0 100...
How would the Lorenz Curve used to calculate the income inequality look like when everyone in a country gets exactly the same wage?
Problem 4 Economic Inequality (20 points) 1) Figure 2 below is an image of a Lorenz curve. a. (4) When the Lorenz curve sags lower, does that mean the economy is more equal or more unequal? b. (6) Explain how to use the information in Figure 2 to calculate the Gini coefficient i. What is the typical range for Gini coefficients? ii. What does a high number indicate? 100 Perfect Equality Line Percentage of income Lorenz Curve 100 Percentage of...
1) Figure 2 below is an image of a Lorenz curve. a. When the Lorenz curve sags lower, does that mean the economy is more equal or more unequal? b. Explain how to use the information in Figure 2 to calculate the Gini coefficient. i. What is the typical range for Gini coefficients? ii. What does a high number indicate? 2) (10) Describe the inequality in income and wealth between countries, and explain whether each has grown or shrank over the past 50 years. Why...
4. Draw a graph showing how the Lorenz Curve shifts when the Gini ratio rises. Make sure to label the axes clearly.