Question

For a given population (for example, residents of the United States), the Lorens Pnction measure how wealth is distributed. IfO Sps 1, then L(p)-the percent of total wealth owned by the poorst p percent of the population In other words, if L(2)-. 1, this says that the porest 20% of people own 10% of the wwalth. 1. In terms of income equity, what does it mean if L(p) is cdoswe to p for some value of p? What does it mean if L(p) is close to 0? 2. The Lorenz Function always sat isfies the following properties: (a) L(0)-0 and L(1)- (b) L(p)Sp for any In real world terms, explain what these properties ea Do they makesense to you? Why? The Lorena Curve is the graph of the Lorenz An example is given inthe a below 0.8 Lorenz Curve Equity Gap 0.2 0.2 0.4 0.6 0.81 p (proportion of population) The area of the shaded region aboe the Lorenz Curve is called the Equity Gap

Answer 1

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