Question

In: Economics

Household Percentage Percent of income Alpha Percent of income Beta Poorest 20% 9 13 Second poorest...

Household Percentage

Percent of income

Alpha

Percent of income

Beta

Poorest 20% 9 13
Second poorest 20% 10 15
Middle 20% 12 13
Second richest 20% 29 26
Richest 20% 40 33


The above table shows the distribution of income in two countries, Alpha and Beta. Based on these distributions of income,

Group of answer choices

Country Beta has a higher value of the Gini coefficient than does Country Alpha.

the Lorenz Curve for country Beta is closer to the line of equality.

Country Alpha has a more equal distribution of income than does Country Beta.

It is impossible to answer the question without more information.

The distribution of income for Inequalia is as follows:

Number of Families

Income

200

less than $3,000

300

between $3,000 and $5,000

500

between $5,000 and $10,000

700

between $10,000 and $20,000

300

over $20,000


If the poverty rate in Inequalia is 25 percent, what is the poverty line in Inequalia?

Group of answer choices

$5,000

$10,000

$15,000

$20,000

able 30

Country Gini Coefficient*
Sweden

0.240

France

0.275

Italy

0.319

United Kingdom

0.334

Portugal

0.395

Latvia

0.377


Refer to Table 30. Which of the following statements is correct?

Group of answer choices

Portugal has a more unequal distribution of income than United Kingdom.

France has a more unequal distribution of income than Italy.

Sweden has the most unequal distribution of income.

United Kingdom has a more equal distribution of income than France.

If income were equally distributed among households,

Group of answer choices

the second fifth of households would have 15 percent of the income.

the fourth fifth of households would have 20 percent of the income.

the top fifth of households would have 50 percent of the income.

50 percent of the households would receive 55 percent of the income.

Table 22

Days of Labor

Units of Output

0

0

1

10

2

18

3

25

4

31

5

36

6

40


Refer to Table 22. Suppose that the firm pays its workers $45 per day. Each unit of output sells for $10. How many days of labor should the firm hire?

Group of answer choices

2

3

4

5

6

Solutions

Expert Solution

Answer)

In the below table, we have calculated the cumulative percentages of both the countries as follows:

Now, in the below diagram,

the black colored line is the line of equality, the red-colored curve is the Lorenz curve of Beta country and the blue colored curve is the Lorenz curve .of the Alpha country.

As, we can observe that the blue curve is the nearest to the line of equality .So, Option-B is correct.

Answer (2) Poverty line = $5000

The total population in the Country Inequalia is equal to 2000 (200 + 300 + 500 +700 + 300)

The poverty line is the minimum income below which people are considered to be poor.

As it is given that 25% of the population is poor. So, it means that the initial 500 people (25% of 2000) in the income bracket are poor.

As we can see that the income brackets covered by the initial 500 people are :

(i) Less than $3000

(ii) Between $3000 and $5000

So, we can conclude that poverty line is equal to $5000.


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