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 8SPPA
To determine
To explain:
Assuming the news that lotteries take money from poor people and make an unequal distribution of income to be correct, explain the way in which lottery affects the distribution of income with the help of Lorenz curve.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The $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
G
The $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
G
=
The $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.
CID
Lotteries result in the distribution of income
OA. becoming more unequal
OB. becoming more equal
OC. remaining unchanged
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 drag it.
Cumulative percentage of income
100-
80-
60-
0
20
40
60
80
100
Cumulative percentage of households
>>> Draw only the objects specified in the question.
40-
20-
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
- Answer this question under 100 words and draw a Lorenz graph to explain it. In the Financial Times’ article “How the pandemic is worsening inequality” (31 Dec 2020) we can read: “About 600m people work globally in the hardest-hit sectors such as hospitality and retail [...]. In addition, the informal economy has been hard-hit – and that is where some of the world’s most vulnerable workers are employed. [...] At the height of the pandemic-induced surge in unemployment, joblessness among people aged 15 to 24 in OECD countries was 7.5 percentage points higher than the start of this year, whereas among those aged 25 and over it rose by 3.2 percentage points. Pandemic-induced job losses have potentially long-lasting consequences: people who start their career during a recession experience lower earnings for a decade after graduation. [...] Around the world, relatively privileged workers have avoided the worst of the pandemic’s economic impact. Up to 40 per cent of those in the ILO’s top…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_forward3. 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.arrow_forward
- The table shows the distribution of income in the Australia Complete the column of the table that records the cumulative percentages of income in Australia received by the cumulative percentages of households. Cumulative percentage of Income Households Lowest 20 percent (percentage) Households Income 8 Lowest 20 13 Lowest 40 Second 20 percent Third 20 percent 18 Fourth 20 percent 23 Highest 20 percent 38 Lowest 60 Lowest 80 100 100.0 The graph shows the Lorenz curve for the United States Draw the line of equality Draw a point to show the cumulative percentage of income received by the lowest 40 percent of Australian households Label it 1, Draw a point to show the cumulative percentage of income received by the lowest 80 percent of Australian households. Label it 2 Draw the Lorenz curve for Australia. Label it Based on the data provided, which country has the more unequal income distribution? OA Australa OB. Neither. They have the same degree of inequality. OC, The United States OD. It…arrow_forwardActual 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_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_forward
- There are two economies. Economy A has 10 people: there are four people that make 10 dollars a day, and two that make each 20, 60 and 100 dollars a day. Economy B has 10 people: four that make 1 a day and two each that make 3, 5 and 10 dollars a day. A. For each economy draw a Lorenz Curve. B. For each economy calculate the 90/10 ratio. C. For each economy calculate the Gini Coefficent. D. Which economy is more unequal?arrow_forwardUse quintiles to briefly summarize the degree of income inequality in the United States. How and to what extent does government reduce income inequality?arrow_forward10) 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.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher: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 Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax