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Chapter 15: Q. 24 (page 378)

If a country had perfect income equality what

would the Lorenz curve look like?

Short Answer

Expert verified

If a country had perfect income equality the Lorenz curve would be line sloping up at 45degrees.

Step by step solution

01

Step 1. Definition 

It's a Graphical way of studying dispersion, Lorenz curve, was first used to measure the inequalities of income in society, the greater distance of the curve from the line of equality distribution more is the inequality in its series

02

Step 2. Graph 

The graph is as follows :

03

Step 3. Explanation

If a country has perfect income equality that means

total income distributiontotal income

but Lorenz curve measures inequalities of income, so the 45-degree line displays the perfect equality of income distribution

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Most popular questions from this chapter

How does the TANF attempt to loosen the poverty trap?

Imagine that the government reworks the welfare policy that was affecting Jonathan in question 1, so that for each dollar someone like Jonathan earns at work, his government benefits diminish by only 30 cents. Reconstruct the table from question 1 to account for this change in policy. Draw Jonathan鈥檚 labor-leisure opportunity sets, both for before this welfare program is enacted and after it is enacted.

Why is there reluctance on the part of some in the United States to redistribute income so that greater equality can be achieved?

Describe how each of these changes is likely to affect poverty and inequality:

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b. Incomes fall for low-income and high-income workers, but fall more for high-income earners.

To reduce income inequality, should the marginal tax rates on the top 1% be increased?
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