All real-world Lorenz curves are below the diagonal line because income is always distributed unequally in the real world.
Answer the following statement true (T) or false (F)
True
The diagonal line represents a perfectly equal distribution of income. The Lorenz curve cannot be above the diagonal line by definition, but in the real world, income distribution is unequal.
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
In practice, price discrimination is never perfect. Why?
What will be an ideal response?
How does the government determine the quota amount that will produce an efficient use of a common resource?
What will be an ideal response?
For the monopolistically competitive firm, the steepness of the demand curve depends on:
A. the steepness of the MC curve. B. the number of consumers in the market. C. the availability of close substitutes. D. None of these statements is correct.