There are 100 households in the economy of Equalor. Initially, 99 of them have an income of $10,000 each, and one household has an income of $1,010,000.
a. What is the median income in this economy? What is the mean income? Through its poverty programs, the government of Equalor now redistributes income:
it takes $990,000 away from the richest household and distributes it equally among the remaining 99 households.
b. What is the median income in this economy now? What is the mean income? Has the median income changed? Has the mean income changed? Which indicator (mean or median household income) is a better indicator of the typical Equalorian household's income? Explain.