Refer to the above Lorenz Curve to help answer the following questions. (a) What does the...
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Refer to the above Lorenz Curve to help answer the following questions. (a) What does the line of Perfect Equality show?(1) (b) What does Disposable Income show?. (1) (c) Explain what it means if a large gap exists between the Lorenz Curve and the line of Perfect Equality. (1) (d) Which shows a greater degree of income equality- the market income curve or the disposable income curve? Explain by referring to both the values of the Gini Coefficients and the position of each curve in relation to the line of perfect equality. (3) (e) For disposable income-if A= 120 and B = 280 what would the value of the gini coefficient be? (1) (f) Approximately what percentage of market Income do the bottom 50% of income earners earn? (1) (g) Approximately what percentage of disposable income do the bottom 50% of income earners earn? (1) Explain how a FALL in unemployment would affect the shape of the Lorenz Curve. (1) income (%) share of Cumulative 100 90 80 70 60 50 40 30 20 10 0 Market Gini coefficient: 0.47 Disposable Gini coefficient: 0.25 0 10 20 Perfect equality line Disposable income -4 Market income B' 30 40 50 60 70 80 Cumulative share of the population from lowest to highest income (%) 90 100 Refer to the above Lorenz Curve to help answer the following questions. (a) What does the line of Perfect Equality show?(1) (b) What does Disposable Income show?. (1) (c) Explain what it means if a large gap exists between the Lorenz Curve and the line of Perfect Equality. (1) (d) Which shows a greater degree of income equality- the market income curve or the disposable income curve? Explain by referring to both the values of the Gini Coefficients and the position of each curve in relation to the line of perfect equality. (3) (e) For disposable income-if A= 120 and B = 280 what would the value of the gini coefficient be? (1) (f) Approximately what percentage of market Income do the bottom 50% of income earners earn? (1) (g) Approximately what percentage of disposable income do the bottom 50% of income earners earn? (1) Explain how a FALL in unemployment would affect the shape of the Lorenz Curve. (1) income (%) share of Cumulative 100 90 80 70 60 50 40 30 20 10 0 Market Gini coefficient: 0.47 Disposable Gini coefficient: 0.25 0 10 20 Perfect equality line Disposable income -4 Market income B' 30 40 50 60 70 80 Cumulative share of the population from lowest to highest income (%) 90 100
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a The line of Perfect Equality shows a situation where income is distributed completely equally amon... View the full answer
Related Book For
Calculus Early Transcendentals
ISBN: 978-0321947345
2nd edition
Authors: William L. Briggs, Lyle Cochran, Bernard Gillett
Posted Date:
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