1. The Gini coefficient is often used to measure inequality. The Lorenz curve The shaded region Sis called a concentration area The Gini coefficient equals two concentration areas, i.e., G= 2S. When the value of the Gini coefficient is close to 0, the underlying distribution is almost uniform, whereas the value close to 1 indicates a maximal inequality, i.e., a total wealth of a population is concentrated in hands of one man. When the Lorenz curve of income distribution within a certain group is given by L (x), show the formula which computes the Gini coefficient.

1. The Gini coefficient is often used to measure inequality. The Lorenz curve The shaded region Sis called a concentration area The Gini coefficient equals two concentration areas, i.e., G= 2S. When the value of the Gini coefficient is close to 0, the underlying distribution is almost uniform, whereas the value close to 1 indicates a maximal inequality, i.e., a total wealth of a population is concentrated in hands of one man. When the Lorenz curve of income distribution within a certain group is given by L (x), show the formula which computes the Gini coefficient.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter15: Poverty And Economic Inequality

Section: Chapter Questions

Problem 7SCQ: Table 15.9 shows the share of income going to each quintile of the income distribution for the...

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Table 15.9 shows the share of income going to each quintile of the income distribution for the United Kingdom in 1979 and 1991. Use this data to calculate what the points on a Lorenz curve would be, and sketch the Lorenz curve. How did inequality in the United Kingdom shift over this time period? How can you see the patterns in the quintiles in the Lorenz curves?
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2.1 In an effort to make the distribution of income more nearly equal, the government of a country passes a tax law that changes the Lorenz curve from y = 0.97x for one year to y = 0.33x + 0.67x for the next year. Find the Gini coefficient of income for both years. (Round your answers to three decimal places.) before after Compare the distributions of income before and after the tax law was passed. Interpret the result. O The change increases the difference in incomes. The change makes no difference in incomes. O There is not enough information to compare the incomes. The change decreases the difference in incomes. O The change makes the incomes equal. Need Help? Read It
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1. The Gini coefficient is often used to measure inequality. The Lorenz curve The shaded region S is called a concentration area The Gini coefficient equals two concentration areas, i.e., G = 2S. When the value of the Gini coefficient is close to 0, the underlying distribution is almost uniform, whereas the value close to 1 indicates a maximal inequality, i.e., a total wealth of a population is concentrated in hands of one man.
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