n economy's Lorenz Curve reveals that an economy's highest income quintile has 65% of the economy's income while the lowest income quintile only has 5% of the economy's income. Solely based on this Lorenz Curve, is the distribution of income fair? Why or why not?
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An economy's Lorenz Curve reveals that an economy's highest income quintile has 65% of the economy's income while the lowest income quintile only has 5% of the economy's income.
Solely based on this Lorenz Curve, is the distribution of income fair? Why or why not?
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- 1. An economy's Lorenz Curve reveals that an economy's highest income quintile has 65% of the economy's income while the lowest income quintile only has 5% of the economy's income. Solely based on the Lorenz Curve, is this distribution of income fair? Why or why not? 2. To combat income inequality and to generate increased tax revenues to fund expenditures, government officials decide to aggressively increase how progressive income taxes are, so much so that the top income earners are marginally taxed 90% of their income (and while this marginal tax rate may seem oppressive, these top income earners still have more than enough income to satisfy all of their needs and all but the most extravagant of wants - basically, these earners have more than enough money). Argue why this tax policy is a fair approach to fund government expenditures. Why might this tax policy fail to achieve its objectives (tax revenues would actually decline as a result)?The $1.4 billion trick to make us accept income inequality Lotteries take money from the poor and redistribute it unequally. The poor, the uneducated, and minorities play the lottery the most, and it takes a big chunk of their income Source: The Huffington Post, January 12, 2016 If the news clip is correct, how does a lottery change the distribution of income? Draw two Lorenz curves to illustrate your answer. Lotteries result in the distribution of income Draw the Lorenz curve in a country that does not have lotteries. Label it Before Draw the Lorenz curve for the country after the introduction of lotteries. Label it After >>> To reposition the label click on the cross by the label box and dragging it 100 80 60 40- 20 Cumulative percentage of income 100 20 40 60 00 Cumulative percentage of households >>>Draw only the objects specified in the question GWhat are three policy solutions to lessen the economic consequences of inequality. Explain in detail.
- Below is a Lorenz Curve for a given country. Suppose its government cuts spending on Medicaid, Supplemental Nutrition Assistance Program and other aids to the poor. Show how the spending cuts would affect income inequality by drawing the new Lorenz Curve.What is the relationship between a Lorenz curve and a Gini coefficient? Give some examples of how Lorenz curves and Gini coefficients can be used as summary measures of equality and inequality in a nation’s distribution of income.How does the Gini ratio relate to the Lorenz curve? Why can’t the Gini ratio exceed 1? What is implied about the direction of income inequality if the Gini ratio declines from 0.42 to 0.35? How would one show that change of inequality in the Lorenz diagram?
- Answer this question under 100 words and draw a Lorenz graph to explain it. In the Financial Times’ article “How the pandemic is worsening inequality” (31 Dec 2020) we can read: “About 600m people work globally in the hardest-hit sectors such as hospitality and retail [...]. In addition, the informal economy has been hard-hit – and that is where some of the world’s most vulnerable workers are employed. [...] At the height of the pandemic-induced surge in unemployment, joblessness among people aged 15 to 24 in OECD countries was 7.5 percentage points higher than the start of this year, whereas among those aged 25 and over it rose by 3.2 percentage points. Pandemic-induced job losses have potentially long-lasting consequences: people who start their career during a recession experience lower earnings for a decade after graduation. [...] Around the world, relatively privileged workers have avoided the worst of the pandemic’s economic impact. Up to 40 per cent of those in the ILO’s top…What is income inequality in economics. Define it with the help of example.There are three agents, a, b, and c. Person a receives $500 in income, b receives $400, and e gets $100. How much income of the total income does the poorest 1/3 receive? How much does the bottom 2/3 receive? Graph the Lorenz Curve. Calculate area B. Caleulate area A. What is the gini coefficient? Use a graph like the one below to draw a picture of the Lorenz curve and help in calculating areas A and B. %income 100% = 1- %population 100% - 1
- 8. Four students have yearly incomes of $5,000, $15,000, $20,000, and $60,000. a. Make a table of the Lorenz Curve and use the Trapezoidal Rule with 4 trapezoids to find the area under the Lorenz Curve. Your answer should be correct to 2 places after the decimal point. The area under the Lorenz Curve is b. Use the results of Part a to find the Gini Index. Your answer should be correct to 2 places after the decimal point. The Gini Index isOn the Lorenz curve, a household earning the median income is in the _______________ quintile. Question 22 options: First Second Third FourthYour friend points to the wages earned by your economics professor and her teaching assistant (TA) as an example of income inequality. Your tenured professor earns $120,000$120,000, drives a BMW, and vacations in Europe, whereas your TA earns $10,000$10,000 per year, rides a bike, and vacations at his mom's house. Because they both teach for a living, your friend argues that this income inequality is not just. Which reply uses the economic life cycle to respond to your friend's argument? Your professor has more bargaining power than your TA and, therefore, has higher earnings. Your professor and TA earn different amounts now but they will have similar earnings over the course of their lives. Your professor was once a TA, and your TA will one day make better money. Your professor has many more responsibilities than your TA and is, therefore, paid more. Older workers typically have more expenses than younger workers due to the high cost of healthcare and other costs…
