Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 23, Problem 2DQ
To determine
The Lorenz curve and proportion of total income that is received by the rich and poor quintile.
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Which would be evidence of an increase in income inequality over time in the United
States?
O a decrease in the percentage of total personal income received by the highest quintile
O an increase in the percentage of total personal income received by the highest quintile
O an increase in the percentage of total personal income received by the four lowest quintiles
O an increase in the percentage of total personal income received by the lowest quintile
%24
A household with income that is two-thirds of the poverty threshold has ratio of income to poverty of
O 0.67.
O 1.50.
O 3.20.
O0.23.
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As income transfer programs accompanying the War on Poverty increased beginning in the latter half of the 1960s, what happened to poverty in the
United States? Check all that apply.
O The adjusted poverty rate has declined rapidly and is now less than half of the official poverty rate.
O The poverty rate declined substantially in the period before the War on Poverty, but not in the period after the start of the War on
Poverty.
O In 2018, the adjusted poverty rate was only 4 percentage points lower than the official rate in 1970.
O The War on Poverty has been largely ineffective in reducing the rate of poverty in the United States.
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- Completed 15 out of 20 Submit All Question 9 of 20 If the poverty guideline for a family of four is $25,750, what is the most that a household can earn to be considered "near- poor"? O $19,312.50 O $12,875 O $32,187.50 O $25,750arrow_forwardThe government announces programs designed to reduce the share of income going to the top quintile from 60% to 20%. You predict that the most likely result is that: O mean household income will fall, because the highest income earners will earn less and work less. median household income will rise, because some of the 40% of redistributed income will be transferred to the third quintile. after redistribution, each quintile will receive 20% of total wealth. O the lowest quintile will receive the 40% taken from the top quintile and switch places.arrow_forwardWealth, earnings, and disposable income are just three of several ways of looking at inequality. Imagine a household that earns $80,000 per year from labor. In that year, it also receives an income of $3,000 from investments, pays $12,000 in tax, and receives $7,000 in transfers from the state. Which of the following is its market income and its disposable income? O $83,000; $71,000. O $83,000 $78,000. O $80,000; $68,000. O $80,000; $75,000. Jarrow_forward
- Consider the following table that gives the monthly per capita consumption expenditure of 10 households with poverty line given as $500 per month. Poverty Gap is %. Monthly per capita consumption expenditure (in $) of 10 households 5 400 300 1000 2500 4 9 400 950 2 3 6 7 8 10 Country A 900 1200 505 100 O a 40 O b. 13 O c. 27 O d. 16arrow_forward"Growth and improvement in inequality are important to alleviate poverty.' а. Examine any FOUR (4) factors that can influence poverty eradication and income distribution in Malaysia. [12 marks] b. Describe any FOUR (4) factors that affect the income distribution in Malaysia.arrow_forward2. Assume there is a community with 8 households and income distribution (1, 4, 5, 8, 10, 12, 15, 17). Let us call this community, group 1. a) If the government takes one unit of income from each of the three richest consumers and gives one unit to each of the three poorest, plot the Lorenz curve for this group. How has this inequality now changed? Explain b) Without plotting the Lorenz curve, show that the Lorenz curve for group 2 with the income distribution (1, 3, 4, 9, 11, 13, 16, 17) crosses the Lorenz curve for the distribution of group 1. c) Calculate the Gini for group 1.arrow_forward
- Show instructions Question 1 Income poverty is about the lack of access to the basic rights of food, clothes and shelter, education, proper health care, clean water -- rights that most of us take for grante ○ True O False Question 2 ( Population is not a direct cause of poverty, but it does compound the problem of poverty. True O False Question 3 Income levels do not necessarily reflect levels of poverty. O True O False Questions 1-10 of 10 | Page 1 of 1 Question 4 War is perhaps the most devastating and serious cause of poverty. O True O False Question 5 The World Bank has established an international poverty line of $10 a day per person in 1985 purchasing power parity (PPP) prices. O True O False Question 6 Analysts have found a strong positive relationship between economic growth and poverty reduction. O True O False Question 7 Most of the world's poor live in South Asia. True O Falsearrow_forwardThe area between the Lorenz curve of a country and the diagonal of perfect equality represents: O A. the area of equality. ОВ. the area of inequality. C. The Gini coefficient. O D. The quantile ratio. O E. the cumulative percentage of the population.arrow_forwardUse the figure below, interpreting the red Lorenz curve, it can be concluded that incomes in this nation are: Percentage of income 100 80 60 40 20 20 Lorenz Curve b A 40 60 Percentage of households O unequal, with income inequitably distributed among household groups. O equal, with income equally distributed among all household groups. unequal, with income equally distributed among all household groups. O equal, with income inequitably distributed among all household groups. P B 80 100arrow_forward
- 3. Comparing Gini coefficients of different countries Aa Aa The following diagram shows the Lorenz curves for three countries. Country X's Lorenz curve is shown in blue, Country Y's Lorenz curve is shown in red, and Country Z's Lorenz curve is shown in green. Region I is the area above Country X's Lorenz curve and below the 45-degree line. Region II is the area below Country X's Lorenz curve and above Country Y's Lorenz curve. Region III is the area below Country Y's Lorenz curve and above Country Z's Lorenz curve. Region IV is the area below Country Z's Lorenz curve. INCOME (Cumulative percent) 100 80 60 40 20 0 The Gini coefficient for Country Z is given by Couny X 20 Country Y Country Z 11 III 60 IV 40 100 HOUSEHOLDS (Cumulative percent) 80 has the highest Gini coefficient.arrow_forwardCumulative percentage of income 90 80 70 60 50 40 30 20 10 O d 40 20 60 80 Cumulative percentage of population If the area of inequality (area between the line of perfect equality and the Lorenz Curve) equals 0.35 and the area beneath the line of perfect equality (given by OAB in the diagram) equals 0.7, calculate the Gini coefficient. A O AOS о в. 0,6 OC. It is impossible to calculate with the information provided. OD. 0,5 100arrow_forward10. Consider the following distribution of income in a 12-person economy, with the modern urban wage 3, the traditional rural income = 1, and the informal urban wage = 2: (1,1,1,1,2,2,2,2,3,.3,3,3). The poverty line through expanded agricultural exports. What happens to relative inequality? Absolute poverty? Calculate the Ahluwalia-Chenery welfare index for terciles (3 fractiles) under GNP weights and equal weights. Why is the equal-weighted index higher? 1.25. Suppose rural incomes are raised to 1.5arrow_forward
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