Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 20, Problem 2IAPA
To determine
Values of A,B,C, and D
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What is the procedure for calculating net income?
Q.1 In the table below, you are given data on income
distribution within the UK for the year 2012-2013.
Population clumped together
based income ($)
Percentage share of total
income ($)
Percentage share of disposable
income (after taxes and
transfers) ($)
Bottom most quintile
Second quintile
Middle quintile
Fourth quintile
3
9.
8
14
15
17
25
22
Top most quintile
49
38
a) Using the information given in the table above and
choosing the appropriate diagram, you are required to plot
two Lorenz curves that will show the distribution of income
before and after intervention by the government in the form
of taxes and benefits. Label them as LC1 and LC2
respectively.
b) Now calculate the Gini coefficients for both cases and
comment on the nature of intervention (or type of tax
system) by the government.
Q.1 In the table below, you are given data on income
distribution within the UK for the year 2012-2013.
Population clumped together
based income ($)
Percentage share of total
income ($)
Percentage share of disposable
income (after taxes and
transfers) ($)
Bottom most quintile
Second quintile
Middle quintile
Fourth quintile
3
9.
8
14
15
17
25
22
Top most quintile
49
38
a) Using the information given in the table above and
choosing the appropriate diagram, you are required to plot
two Lorenz curves that will show the distribution of income
before and after intervention by the government in the form
of taxes and benefits. Label them as LC1 and LC2
respectively.
Chapter 20 Solutions
Foundations of Economics (8th Edition)
Ch. 20 - Prob. 1SPPACh. 20 - Prob. 2SPPACh. 20 - Prob. 3SPPACh. 20 - Prob. 4SPPACh. 20 - Prob. 5SPPACh. 20 - Prob. 6SPPACh. 20 - Prob. 7SPPACh. 20 - Prob. 8SPPACh. 20 - Prob. 9SPPACh. 20 - Prob. 1IAPA
Ch. 20 - Prob. 2IAPACh. 20 - Prob. 3IAPACh. 20 - Prob. 4IAPACh. 20 - Prob. 5IAPACh. 20 - Prob. 6IAPACh. 20 - Prob. 7IAPACh. 20 - Prob. 8IAPACh. 20 - Prob. 9IAPACh. 20 - Prob. 10IAPACh. 20 - Prob. 11IAPACh. 20 - Prob. 1MCQCh. 20 - Prob. 2MCQCh. 20 - Prob. 3MCQCh. 20 - Prob. 4MCQCh. 20 - Prob. 5MCQCh. 20 - Prob. 6MCQCh. 20 - Prob. 7MCQ
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- explain how gross product is calculates using the income approacharrow_forwardWhat is the formula of Income Approach, one of the methods of Gross Domestic Product and how is it calculated?arrow_forwardQ3: Without doing additional calculations, explain what would happen to the shape of the Lorenz curve and inequality in 2012 if households in and below the 15th percentile received cash transfers from the government.arrow_forward
- Muintiie oT 1st 3rd 2nd 4th Population Quintile's % of Income, Ecuador, 2000 Quintile's % of Income, Ecuador, 2010 Quintile's % of Income, United States, 2010 Sth 7 11 18 61 9. 12 21 54 10 14 20 51 United States data from the Congressional Budget Office at CBO.gov Before-tax income, rounded to whole s. Data for other countries from WorldBank.org, rounded to whole %s. Report your answers to two decimal places. According to these data, the Gini coefficient for Ecuador in 2000 is 0.48 The Gini coefficient for Ecuador in 2010 is 0.44 These Gini coefficients indicate that in Ecuador, the income distribution was in 2000 compared to 2010. In 2010, the income distribution was in the United States compared to Ecuador. 3.arrow_forwardFrom 2007 to 2009 calculate the percentage change inarrow_forwardB. Calculate the equiibrium level of incomearrow_forward
- Income aproach Table 2 Items RM (Millions) Wages and salary 1,050 Rent 850 Interest 880 Distributed Profit 1,300 Proprietor’s income 750 Depreciation 200 Undistributed profit 200 Transfer payment 75 Social security contribution 90 Personal Income Tax 110 Net factor income earned from abroad 89 Based on the above data, calculate: Gross Domestic Income Gross National Income National Incomearrow_forwardA group of 10 people have the following annual incomes: 55,000,30,000,15,000,20,000,35,000,80,000,40,000,45,000,30,000,50,000. Calculate the share of total income each quintile of this income distribution received. Do the top and bottom quintile s in this distribution have a greater or larger share of total income than the top and bottom quintiles of the U.S. income distribution for 2005?arrow_forwardWhich one among the following is private income? a. Wages of employees b. Government income c. Earnings of private organizations d. Salaries of managersarrow_forward
- What is the measure of the income earned by owners of resources used in making final goods and services? a. personal income b. gross domestic income c. retained earnings d. national incomearrow_forward11. Working with Numbers and Graphs Q3 Consider an economy with only five people. Initially, Kevin earns $9,600 per year, Maria earns $12,000 per year, Rajiv earns $16,800 per year, Simone earns $20,000 per year, and Yakov earns $21,600 per year. Complete the following table by calculating each individual's share of total income. Individual Kevin Maria Rajiv Simone Yakov Initial Income Share (Percent) Suppose that there is a rise in everyone's real income. Kevin now earns $9,900 per year, Maria now earns $13,500 per year, Rajiv now earns $18,900 per year, Simone now earns $22,500 per year, and Yakov now earns $25,200 per year.arrow_forwardPersonal income PI is Select one: a. All income received by households b. All income earned by households minus personal taxes c. All income received by households minus personal taxes d. None of the answers are correct e. All income earned by householdsarrow_forward
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