Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 15, Problem 2QP
To determine
Comparing values of Gini coefficient between two countries and its income distribution.
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The ratio of income of the richest fifth of the population to the income of the poorest fifth for the U.S. is?
Imagine someone living close to the poverty
line in a developing country. This person runs
a small business filtering and selling water.
Her daughter gets sick, and she has to sell her
filtering machine to pay for treatment. Now
she makes very little money cleaning fish for a
local fishing cooperative. Graph her income
today versus her income tomorrow before her
daughter got sick. Explain your assumptions
with labels on the graph. Then graph what
happens to the equilibrium after her daughter
gets sick. Hint: this is an example of a trap.
Lorenz Curve. The income distribution of a certain country is given by
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- Question 12 The following income distribution data are for Lesotho: Quintile Lowest 10% Lowest 20% Second quintile Third quintile Fourth quintile Highest 20% Percent Share 2.2% 3.0% 7.2% 12.5% 21.0% 56.3% Explain how to find the Gini coefficient, graphically. (Hint: You might want to use labels on your graph). You should be able to draw a graph on your computer, save it as a graph, picture, or document, and upload that graph, picture, or document to your answer box. If you cannot do that, you can always draw a graph on paper, take a picture, and upload the picture to your answer box.arrow_forwarda. Is the presence of an underground economy likely to result in a Gini coefficient that overstates or understates poverty? b. Consider a simple economy where 90 percent of citizens report an annual income of $10,000 while the remaining 10 percent report an annual income of $110,000. What is the Gini coefficient associated with this economy? c. Suppose the poorest 90 percent of citizens actually have an income of $15,000 because each receives $5,000 of unreported income from the underground economy. What is the Gini coefficient now?arrow_forwardIncome inequalities tend to be larger in poorer countries. As countries develop, the personal distribution of income tends to become more equal. Why is this the case?arrow_forward
- The table below presents the percentage of total income that goes to a certain fraction of the population of the country of Sanaton. For example, according to the table, the bottom 40% of the population owns 25% of the total income generated in Sanaton. What is the income share of the third quintile? Cumulative percentage of population 20 40 60 80 100 Cumulative percentage of income owned 15 25 40 60 100arrow_forwardIs it possible for everyone's real income to rise even though the income distribution in a society has become more an equal? Give an example to support your answer.arrow_forwardThe figure shows the distribution of pre-tax income for Canadian families in 2015. Distribution of Family Income, 2015 60- Which of the following best describes the distribution of pre-tax earnings? 50- A. Just over 40 percent of families earned less than $40,000 while just over 20 percent of families earned more than $100,000. 41.8% 40- 38.4% B. Nearly 40 percent of families earned less than $40,000 while just under 20 percent of families earned more than $100,000. O C. Just over 20 percent of families earned less than $40,000 while just over 40 percent of families earned more than $100,000. 30- 19.8% O D. Nearly 20 percent of families earned less than $40,000 while just under 40 percent of families earned more than $100,000. 20- 10- $40K to $100K Pre-tax Family Income < $40K $100K and over Percentage of Familiesarrow_forward
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