Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 20, Problem 3IAPA
To determine
Distribution of income which is more unequal.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A group of 10 people have the following annual incomes: $24, 000, $18, 000, $50, 000, $100, 000,
$12, 000, $36, 000, $80, 000, $10, 000, $24, 000, $16, 000.
Calculate the share of total income that each quintile receives from this income distribution. What percent
of the total income is represented by the highest quintile? Round your answer to the nearest tenth.
Provide your answer below:
3. There are three agents, a, b, and c. Person a receives $500 in income, b receives $400, and c gets $100. How much income of the total income does the poorest 1/3 receive? How much does the bottom 2/3 receive? Graph the Lorenz Curve. Calculate area B. Calculate area A. What is the gini coefficient? Use a graph like the one below to draw a picture of the Lorenz curve and help in calculating areas A and B.
10) What does a Lorenz curve show? Show a Lorenz
curve for a country like the USA where there is a
difference between income of the population.
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
Knowledge Booster
Similar questions
- There are three agents, a, b, and c. Person a receives $500 in income, b receives $400, and e gets $100. How much income of the total income does the poorest 1/3 receive? How much does the bottom 2/3 receive? Graph the Lorenz Curve. Calculate area B. Caleulate area A. What is the gini coefficient? Use a graph like the one below to draw a picture of the Lorenz curve and help in calculating areas A and B. %income 100% = 1- %population 100% - 1arrow_forwardWhat is the relationship between a Lorenz curve and a Gini coefficient? Give some examples of how Lorenz curves and Gini coefficients can be used as summary measures of equality and inequality in a nation’s distribution of income.arrow_forwardThe $1.4 billion trick to make us accept income inequality Lotteries take money from the poor and redistribute it unequally. The poor, the uneducated, and minorities play the lottery the most, and it takes a big chunk of their income Source: The Huffington Post, January 12, 2016 If the news clip is correct, how does a lottery change the distribution of income? Draw two Lorenz curves to illustrate your answer. Lotteries result in the distribution of income Draw the Lorenz curve in a country that does not have lotteries. Label it Before Draw the Lorenz curve for the country after the introduction of lotteries. Label it After >>> To reposition the label click on the cross by the label box and dragging it 100 80 60 40- 20 Cumulative percentage of income 100 20 40 60 00 Cumulative percentage of households >>>Draw only the objects specified in the question Garrow_forward
- The table shows after-tax income shares in Canada in 1986 and 2015. After-tax income After-tax income 1986 2015 (percent of total) Households Lowest 20 percent Second 20 percent Middle 20 percent Fourth 20 percent Highest 20 percent 5 11 18 25 41 7 13 18 23 39 Draw a point to show the income earned by the lowest 20 percent of households in 1986. Draw a point to show the income earned by the lowest 60 percent of households in 1986. Draw a Lorenz curve that is consistent with the two points you've plotted. Canadian after-tax income is distributed equally in 2015 than in 1986. 100- 90- 80- 70- 60+ 50- 40- 30+ 20- 10- 04 Cumulative percentage of income 10 20 30 40 50 60 70 80 90 100 Cumulative percentage of households >>> Draw only the objects specified in the question.arrow_forward5- Calculate Gini coefficient for a country with the following deciles in income share data: Country X: 30 (richest quantile) 20 What is the area under the Lorenz Curve? Please show your diagram. 10 5 5 5 5 3 2arrow_forwarda) With the following data draw a Lorenz Curve, putting labels on the graph and writing out data point values. Explain what the Lorenz Curve illustrates, and what the results mean. b) Now explain how one gets the Gini Coefficient from the Lorenz Curve, and what information the coefficient provides.arrow_forward
- Actual Distribution of Wealth in the US Source: Adapted from the video "Wealth Inequality in America," 2012. Note: This document uses 2009 data. As of 2017, this inequality had only become greater. In this graph, the population of 300-plus million Americans is reduced to a representative group of 100 people. So, each person in this image represents 1% of the population. This group of 100 people has been lined up according to their wealth, poorest people on the left, wealthiest on the right. These 100 people have been shaded based on which 20% quintile they fall into. Then, the total wealth of the United States, which was roughly $54 trillion in 2009, was distributed among our 100 Americans. The poorest Americans don't even register, they are down to pocket change, and the middle class is barely distinguishable from the poor. 1% of America has 40% of all the nation's wealth, the bottom 80% only has 12% between them. The top 1% own half the country's, stocks, bonds and mutual funds. The…arrow_forwardStep on how to solve on Excel. In a certain country, the population consists of five blue people and five green people. Each green person has an income of $2 per year. Each blue person has an income of $6 per year.a. Draw the Lorenz Curve for this country.b. On your diagram from Part a, indicate clearly what area you would divide by what other area to calculate the Gini Coefficient.c. Calculate the Gini Coefficient. Show your work.arrow_forwardQuestion 11 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% Carefully graph the Lorenz curve, labeling the axes. 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_forward
- 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_forwardThe $1.4 billion trick to make us accept income inequality Lotteries take money from the poor and redistribute it unequally. The poor, the uneducated, and minorities play the lottery the most, and it takes a big chunk of their income Source: The Huffington Post, January 12, 2016 If the news clip is correct, how does a lottery change the distribution of income? Draw two Lorenz curves to ilustrate your answer. Lotteries result in the distribution of income Draw the Lorenz curve in a country that does not have lotteries. Label it Before Draw the Lorenz curve for the country after the introduction of lotteries. Label it After >> To reposition the label click on the cross by the label box and dragging it 100 80 60 40- 20 Cumulative percentage of income 100 20 40 60 00 Cumulative percentage of households >>> Draw only the objects specified in the question Garrow_forwardImagine an economy with only two people. Larry earns $20,000 per year, while Roger earns $80,000 per year. As shown in the following figure, the Lorenz curve for this twoperson economy consists of two line segments. The first runs from the origin to point a, while the second runs from point a to point b. a. Calculate the Gini ratio for this two-person economy using the geometric formulas for the area of a triangle (= ½ × base × height) and the area of a rectangle ( = base × height). (Hint: The area under the line segment from point a to point b can be thought of as the sum of the area of a particular triangle and the area of a particular rectangle.) b. What would the Gini ratio be if the government taxed $20,000 away from Roger and gave it to Larry? (Hint: The figure will change.) c. Start again with Larry earning $20,000 per year and Roger earning $80,000 per year. What would the Gini ratio be if both their incomes doubled? How much has the Gini ratio changed from before the doubling…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax