a) Plot the Lorenz curve for the income distribution: (2,2,4,6,8,20,30,40,60,100) Consider an income redistribution that takes...

a) Plot the Lorenz curve for the income distribution:

(2,2,4,6,8,20,30,40,60,100)

Consider an income redistribution that takes 20% of income from each of the three richest individuals and distribute equally to individuals that have an income below the poverty line (9). Plot the Lorenz curve again to demonstrate that inequality has decreased.

What happened to the coefficient of variation between the two periods? What can you conclude about the change in inequality between periods from this?

Expert Solution

Rahul Sunny answered 8 months ago

Consider a community with ten persons. a. Plot the Lorenz curve for the income distribution (2,2,4,6,8,20,30,40,60,100)...

Consider a community with ten persons. a. Plot the Lorenz curve for the income distribution (2,2,4,6,8,20,30,40,60,100) b. Consider an income redistribution that takes 20% of income from each of the three richest individuals and distribute equally to individuals that have an income below the poverty line(9). Plot the Lorenz curve again to demonstrate that inequality has decreased. c) Show on the same diagram the Lorenz curve for the income distribution (8,18,20,22,26,28,30,32,40,48)

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