Learn the toughest concepts covered in Microeconomics with step-by-step video tutorials and practice problems by world-class tutors

Income Inequality and Poverty

1

Lorenz Curve and the Gini Coefficient

11m

Play a video:

2

Problem

Which of the following would represent the Lorenz curve of an nation where everyone earned equal income?

A

The Lorenz curve would have a negative slope

B

The Lorenz curve would be U-shaped.

C

The Lorenz curve would be a straight line with a slope of 1.

D

The Lorenz curve would not exist.

3

Problem

Which of the following is true regarding the Gini coefficient?

A

The Gini coefficient will only fall when population rises quickly

B

As income inequality rises, the Gini coefficient will fall

C

As income inequality falls, the Gini coefficient will fall

D

The Gini coefficient breaks the population into quintiles based on income

4

Problem

The country of Newland has a Lorenz curve where the area between the line of equal distribution and the Lorenz curve is 0.22 and the area below the Lorenz curve is .46. What is the Gini coefficient for Newland?

A

0.22

B

0.32

C

0.46

D

0.68