Refer to Figure 18-9 to answer the following questions

a. Did the distribution of income become more equal in 2016 that it was in 2015, or did it become less equal? Explain.
b. If area A = 1,600, area B = 200, and area C = 3,200, calculate the Gini coefficient for 2015 and the Gini coefficient for 2016.


a. The distribution of income became more equal in 2016. The Lorenz Curve for 2016 is closer to the diagonal line of equality than is the Lorenz Curve for 2015.
b. The Gini Coefficient = (the area inside the Lorenz Curve)/(the area beneath the diagonal line of equality). Thus, for 2015, the Gini Coefficient = A + B/(A + B + C) = 1,800 /5,000 = 0.36. For 2016, the Gini Coefficient = (A)/(A + B + C) = 1,600 /5,000 = 0.32.

Economics

You might also like to view...

If the prices of goods and services were expressed in terms of carved wooden beads, then the carved wooden beads would be serving as a

A) store of value. B) medium of exchange. C) mechanism for transforming present purchases into future purchases. D) unit of account.

Economics

The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table. Based on the table, which of the following is correct?

A) The total fixed cost is $1. B) The average fixed cost of 1 gallon is $1.00. C) The average variable cost of 2 gallons of ice cream is $1.00 per gallon. D) Only answers A and B are correct. E) Answers A, B, and C are correct.

Economics

Entry of new firms into a perfectly competitive market lowers the profits of the existing firms

Indicate whether the statement is true or false

Economics

A severe freeze has once again damaged the Florida orange crop. The impact on the market for oranges will be a leftward shift of: a. the demand curve, as consumers try to economize because of the shortage

b. the demand curve and a rightward shift of the supply curve. c. the supply curve. d. the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price.

Economics