What is a Lorenz curve? How is it constructed?
What will be an ideal response?
The Lorenz curve is a two-dimensional graph that can be used to picture the degree of income inequality. The percentage of households is listed on the horizontal axis of the graph and the percentage of income is listed on the vertical axis of the graph. A diagonal straight line running from the origin of the graph to the upper right corner is the line of perfect equality. A point on this line would indicate that the same percentage of households received the same percent of income.
Actual income distributions, however, are unequal so that the Lorenz curve representing actual income distribution data would be a curve bowed right from the diagonal line. For example, the Lorenz curve with actual data might connect the following set of points: 20 percent of households receive 4% of income, 40 percent of households receive 15% of income, 60 percent of households receive 31% of income, 80 percent of households receive 55% of income, and 100 percent of households receive 100% of income.
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The balance of trade for Ireland is measured by which of the following?
a. the value of Irish exported goods and services minus the value of goods and services imported into Ireland b. the value of income receipts on Irish investments abroad minus income payments on foreign investments in Ireland c. the value of Irish merchandise exports minus the value of merchandise imports into Ireland d. the balance on Irish capital account minus the balance on Irish current account e. the balance on Irish capital account plus the balance on Irish current account
In the short run, if average variable cost equals $50, average total cost equals $75, and output equals 100, the total fixed cost must be:
A. $25. B. $2,500. C. $5,000. D. $7,500.
Suppose that during a given time period the implicit cost for a business was $1,000 and that the explicit cost was $5,000. Also suppose that the firm sold 1,000 units of its products at $5 per item. We can conclude that the firm's
A) accounting profit was $5,000, and its economic profit was $0. B) accounting and economic profits were both $0. C) accounting profit was $0, and economic profit was $1,000. D) accounting profit was $0, and economic profit was -$1,000.