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This is a chance to earn more points (up to 20)

Economics

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This is a chance to earn more points (up to 20). Effort matters. You may still get a high score on this problem set even if every answer is not exactly correct as long as you are close and show that you really tried. 

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• Income Distribution Problem Set

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  Income Distribution Problem Set^[1]

   

  1. The graph below show the Lorenz curve for two countries.

   

  

   

   

  Which curve shows bigger income inequality?

• The two countries have equal income distribution.
• Red
• Blue

•  

   

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  ^[1] This assignment by Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License.

   

   

   

  Use the following information to answer questions 2 through 6:

  Suppose society consists of 5 families whose incomes are $8,000, $12,000, $20,000, $40,000, and $80,000.

   

  2. What is the total income in this society?

   

   

  3. What percentage of total income is earned by the poorest quintile?

   

   

   

  4. What percentage of total income is earned by the richest quintile?

   

   

   

  5. What percentages of total income are received by the second, third, and fourth quintiles?

   

   

  6. Construct a Lorenz curve for this five-family economy.

   

   

   

   

   

   

   

  7. Suppose that a government antipoverty program guarantees every family with a single mother and two children $15000 in income. With this program, each time the mother earns $1,000, the government will deduct $1,000 of its support. Suppose that the hourly wage is $10.75. Given this data, complete the table:

   

  Amount Worked (hours)	Total Earnings	Government Support	Total Income
  0
  500
  1000
  1500
  2000
  2500
  3000