ECON311 Midterm: Sample Questions 1-10 w Notes
21 Dec 2018
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The lorenz curve for brazil for 1990 lies completely to the right of the lorenz curve for chile (except at the ends). Shape indicates degree of inequality in income distribution. Curve must touch 45 line at both the lower-left corner and the upper-right corner. If everyone had the same income, the lorenz curve would lie along the 45 line. If only one household received income and all other households had none, the curve would trace the bottom and right-hand borders of the diagram. Gini coefficient: measure of relative inequality; derived from lorenz curve. = (value of area a) / (area a + b) The longer the share of the area between the 45 line and the lorenz curve (area a), the higher the value of the gini coefficient. Range of coefficient is from 0 (perfect equality) to 1 (perfect inequality)
