Question

In: Economics

Consider the plight of Robin of Lochslay. Initially, he owns $500 of wealth and the Sheriff...

Consider the plight of Robin of Lochslay. Initially, he owns $500 of wealth and the Sheriff of Nottingham also owns $500 of wealth. If they are the only two individuals who own wealth near Sherwood Forest, the Lorenz Curve lies on top of the 45 - degree line. True or false?

True

False

Solutions

Expert Solution

The answer is true

the Lorenz curve shows the degree of income equality in a country. The 45 degree line is the line of perfect equality. Since the income of both the individuals have the same income = 500, there is no income inequality and the Lorenz curve is just the line of perfect equality (45 degree line)


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