Consider a society consisting of the following three income classes 05 mill rich households with an income of 40000 per month 75 mill middleclass households with an income of 2400 per month 2 mill poor households with an income of 1000 per month 

a). Plot the Lorenz Curve and calculate the Gini coefficient 

b). Assume the government levies a 475 tax on the income of the rich households and distributes the money equally among all other households.

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a Plot the Lorenz Curve and calculate the Gini coefficient The Lorenz curve is a graphical representation of the distribution of income or wealth within a population It shows the percentage of the pop... View the full answer