Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 33m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

16. Income Inequality and Poverty

Lorenz Curve and Gini Coefficient

Microeconomics

16. Income Inequality and Poverty

Lorenz Curve and Gini Coefficient

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Multiple Choice

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

The Lorenz curve would have a negative slope

The Lorenz curve would be U-shaped.

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

The Lorenz curve would not exist.

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Verified step by step guidance

Understand the concept of the Lorenz curve: It is a graphical representation of income or wealth distribution within a nation, showing the proportion of total income earned by cumulative percentages of the population.

Recognize that a perfectly equal income distribution means that each percentage of the population earns the same percentage of total income.

Visualize the Lorenz curve for perfect equality: In this scenario, the curve would be a straight line from the origin (0,0) to the point (1,1) on a graph where the x-axis represents the cumulative percentage of the population and the y-axis represents the cumulative percentage of income.

Identify the slope of the line: For perfect equality, the line has a slope of 1, indicating that each additional percentage of the population accounts for an equal percentage of total income.

Conclude that the Lorenz curve for a nation where everyone earns equal income is a straight line with a slope of 1, representing perfect equality.

11:3m