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Chapter 30: Q.14 (page 690)

Now suppose that in the situation described in Problem 30-13, the distribution of income changes in such a way that A increases to one-third of the area denoted B. What is the new value of the Gini coefficient?

Short Answer

Expert verified

the new value of the Gini coefficient is25%

Step by step solution

01

Given Information

The Gini coefficient is the proportion of the region between the line of amazing equity and the line of inequality. Greater inequality implies a higher coefficient as well as the other way around.

02

Explanation

Calculating the Gini coefficient,

A/(A+B)

Area of A = 13Area of B

⇒B=3A

A/(A+B)=A/4A=1/4=0.25=25%

Hence the new value of the Gini coefficient is25%

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