Refer to Figure 18-8 to answer the following questions
a. Did the distribution of income become more equal in 2016 than it was in 2015, or did it become less equal? Explain.
b. If area A = 1,900, area B = 450, and area C = 2,650, calculate the Gini coefficient for 2015 and the Gini coefficient for 2016.
a. The distribution of income became less equal in 2016. The Lorenz Curve for 2016 is farther from 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)/(A + B + C) = 1,900 /5,000 = 0.38. For 2016, the Gini Coefficient = (A + B)/(A + B + C) = 2,350 /5,000 = 0.47.
You might also like to view...
Of the following countries, which is the best example of a mixed economy?
A) Mexico B) Cuba C) North Korea D) China
Cyrus McCormick is best known for
a. manufacturing the mechanical reaper. b. developing hybrid strains of corn. c. introducing chemical fertilizers. d. the invention of the single-horse plow.