Suppose there is a high inequality in household income between the highest and the lowest income groups in one country. In response, the government raises the income tax for the highest income group and provides subsidies to the lowest-income group. What
would happen to the Lorenz curve as a result of the government programs? Explain.
What will be an ideal response?
The government tax and subsidy policies would not change the Lorenz curve because it does not account for the income tax and income in kind provided by the government.
Economics
You might also like to view...
Firms in monopolistic competition determine the profit-maximizing level of output by producing
A) the same output level as rivals do. B) where average total cost is minimized. C) at the point of minimum average fixed cost. D) where marginal revenue equals marginal cost. E) where price equals average total cost.
Economics
When does the marginal social cost of producing a good exceed the marginal private cost of producing it?
What will be an ideal response?
Economics