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Chapter 30: Q.30.1 - Learning Objectives (page 668)

Describe how to use a Lorenz curve to represent a nation's income distribution

Short Answer

Expert verified

The Lorenz curve is the realistic technique for concentrating on scattering. Showing the degree of takeoff scattering between equivalent appropriation and real dispersion of a variable is utilized.

Step by step solution

01

Given Information

The Lorenz curve is the realistic technique for concentrating on scattering. Showing the degree of light scattering between equivalent circulation and real dissemination of a variable is utilized.

02

Explanation 

On the X-axis the bent line shows the combined level of workers, positioned from least fortunate to most extravagant, against the aggregate level of all-out pay on the Y-axis. This is the Lorenz bend.

The Lorenz Curve is contrasted with the line of ideal balance to show the degree of pay and abundance disparity in a country.

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Most popular questions from this chapter

Why do you suppose that choosing other increments besides \(15,000 or \)30,000 can yield even more distributional variations of households within these seven income groupings?

(Hint: what do you think could happen if one were to broaden the income increments to \(100,000 or narrow them to \)5,000 while holding the number of income groups equal to seven?)

Consider the graph nearby, which depicts Lorenz curves for countries X, Y, and Z.

a. Which country has the least income inequality?

b. Which country has the most income inequality?

c. Countries Y and Z are identical in all but one respect: population distribution. The share of the population made up of children below working age is much higher in country Z. Recently, however, birthrates have declined in country Z and risen in country Y. Assuming that the countries remain identical in all other respects, would you expect that in 20 years the Lorenz curves for the two countries will be closer together or farther apart? (Hint: According to the age-earnings cycle, what typically happens to income as an individual begins working and ages?)

A government agency notifies the physicians' group in Problem 30-10 that to continue providing services in the community, the group must document its activities. The resulting paperwork expenses raise the cost of each unit of health care services that the group provides. What is the likely effect on the profit-maximizing price and the equilibrium quantity of health care services provided by the physicians' group in this community?

Identify whether each of the following proposed poverty measures is an absolute or relative measure of poverty, and discuss whether poverty could ever be eliminated if that measure were utilized.

a. An inflation-adjusted annual income of \(25,000 for an urban family of four

b. Individuals with annual incomes among the lowest 15 percent

c. An inflation-adjusted annual income of \) 10,000 per person

Recognize the role played by third-party payments in rising health care costs and explain the key elements of and economic effects of the U.S. national health insurance program
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