Use quintiles to briefly summarize the degree of income
in-equality in the United States. How and to what extent does
government reduce income inequality?
a. Assume that Al, Beth, Carol, David, and Ed receive incomes of
$500, $250, $125, $75, and $50, respectively. Construct and
interpret a Lorenz curve for this five-person economy. What
percentage of total income is received by the richest quintile and
by the poorest quintile?
b. How does the Gini ratio relate to the Lorenz curve?...