Economics 1021A/B Study Guide - Quiz Guide: Vilfredo Pareto, Pareto Efficiency, Dynamic Efficiency

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: bruce hammond

Document Summary

Income distribution: sen presents two cases of income equality, probabilistic distribution: argues for income equality because of uncertainty: welfare is maximized on average with an equal distribution of a fixed total output and income. A fixed amount of income to distribute. Individuals are subject to diminishing marginal utility. Measuring poverty and income distribution: the lorenz curve is a graphical representation of the cumulative distribution function of a probability distribution. Absolute vs. relative poverty: absolute poverty is measured by counting the number of people living below a defined common threshold income or absolute level (ex. per day: relative poverty is measured by comparing a person"s or household"s income with a median or average income earned by all households in an economy. Quantitative as in physical growth of human beings (height, weight) Measured by real gdp, per capita gdp. More qualitative in nature, involves welfare and living standards.