Worsened Income Distribution under the Modern-Sector Enrichment Growth Typology (Lorenz curve)
Why does the poverty gap increase when there is a growth in the modern sector enrichment? Why does inequality increase?
Homework Answers
When there is a growth in modern sector enrichment, following things experience a rise in them:
- Technology
- Innovation arena
- Advances services
However, these advancements can only be understandable by the people who experience these things (certainly not the poor ones). The production processes in modern sectors grow using new technologies and services which makes already stabled income people more well off. This leads to increase the poverty gap.
The income of such people rises due to the increase in growth. While on the other hand, the income levels of poor does not change. This leads to inequality. Here inequality refers to income and wealth inequality. This is what is measured by Lorenz curve i.e, the relation between the income distribution of certain income groups.It measures the income and wealth inequality prevailing in the country.
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Worsened Income Distribution under the Modern-Sector Enrichment Growth Typology (Lorenz curve) Why does the poverty gap...
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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...
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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...
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3. The Gini Index Problem How is possible to measure the distribution of income among the inhabitants of a given country One such measure is the Gini index, named after the Italian economist Corrado Gini, who first devised it in 1912. We first rank all households in a country by income and then we compute the percentage of households whose income is at most a given percentage of the country's total income. We define a Lorenz Curve y L(x) on...
demand curve (more sensitive to price)? Why? Media Analysis Question In today's economy, many sectors telecoms, cable TV, digital branches from social media to internet search, health insurance pharmaceuticals, agro-business, and many more cannot be understood through the lens of competition. In these sectors, what competition exists is oligopolistic, not the "pure" competition depicted in textbooks. A few sectors can be defined as "price taking"; firms are so small that they have no effect on market price Agriculture is the...
Read below and answer, Why does a business that has profit of
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Jones Electrical Distribution After several years of rapid growth, in the spring of 2007 Jones Electrical Distribution anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Metropolitan Bank-a local one- branch bank-to $250,000 in 2006. The maximum loan that Metropolitan would make...
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