Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 15.2, Problem 1ST
To determine
Distribution of income shares.
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In a society with 240,000 households, 10,000 households earn $4 each, 4,000 households earn $2 each, 10,000 households earn $10 each, and the rest earn $1 each.What is the income share of the third quintile? (Not the cumulative income share, just the share of that quintile.) Please write down the answer with two decimal points in percentage form without the % sign. XX.xx, NOT XX.xx%
Question 12
The following income distribution data are for Lesotho:
Quintile
Lowest 10%
Lowest 20%
Second quintile
Third quintile
Fourth quintile
Highest 20%
Percent Share
2.2%
3.0%
7.2%
12.5%
21.0%
56.3%
Explain how to find the Gini coefficient, graphically. (Hint: You might want to use labels on your
graph). You should be able to draw a graph on your computer, save it as a graph, picture, or
document, and upload that graph, picture, or document to your answer box. If you cannot do that,
you can always draw a graph on paper, take a picture, and upload the picture to your answer box.
The data in the table below shows the income of some random people in Massachusetts. If these were the only people in
Massachusetts what is the average (absolute) difference in income among all the pairs?
nаme
Pre-tax income
Mayor Wu
$20
Tom Brady
$120
Matt Damon
$60
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- If an economy's income is completely equally distributed, then the value of its Gini coefficient is income is completely unequally distributed, then the value of its Gini coefficient is 0; infinity 0; 1 1;0 infinity ; 0 If an economy's Suppose the Gini coefficient in Canada is 0.05, and the Gini coefficient in the United States is 0.42. Which country's income distribution is more evenly distributed? Canada Canada and the United States have the same income distribution. the United States More information is needed to answer this question.arrow_forwardConsider an economy with the following income distribution: each person in the bottom quartile of the income distribution earns $15,000; each person in the middle two quartiles earns $40,000; and each person in the top quartile of the income distribution earns $100,000.a. What is the Gini coefficient associated with this income distribution?b. Suppose the bottom quartile pays no taxes, the middle two quartiles pay 10 percent of its income in taxes, and the top quartile pays 28 percent of its income in taxes. Two-thirds of all tax money is redistributed equally to all citizens in the form of military defense, government pensions (social security), roads/highways, and so on. The remaining one-third of tax money is distributed entirely to the poorest quartile. What is the Gini coefficient associated with this redistribution plan?Would you consider this tax and redistribution plan to be a particularly aggressive income redistribution policy?arrow_forwardThe data in the table below shows the income of some random people in Massachusetts. If these were the only people in Massachusetts what is the average (absolute) difference in income among all the pairs? nаme Pre-tax income Mayor Wu $20 Tom Brady $120 Matt Damon $60 QUESTION 12 (continued) What is the Gini coefficient for Massachusetts?arrow_forward
- Question 11 The following income distribution data are for Lesotho: Quintile Lowest 10% Lowest 20% Second quintile Third quintile Fourth quintile Highest 20% Percent Share 2.2% 3.0% 7.2% 12.5% 21.0% 56.3% Carefully graph the Lorenz curve, labeling the axes. You should be able to draw a graph on your computer, save it as a graph, picture, or document, and upload that graph, picture, or document to your answer box. If you cannot do that, you can always draw a graph on paper, take a picture, and upload the picture to your answer box.arrow_forwardThe $1.4 billion trick to make us accept income inequality Lotteries take money from the poor and redistribute it unequally. The poor, the uneducated, and minorities play the lottery the most, and it takes a big chunk of their income Source: The Huffington Post, January 12, 2016 If the news clip is correct, how does a lottery change the distribution of income? Draw two Lorenz curves to ilustrate your answer. Lotteries result in the distribution of income Draw the Lorenz curve in a country that does not have lotteries. Label it Before Draw the Lorenz curve for the country after the introduction of lotteries. Label it After >> To reposition the label click on the cross by the label box and dragging it 100 80 60 40- 20 Cumulative percentage of income 100 20 40 60 00 Cumulative percentage of households >>> Draw only the objects specified in the question Garrow_forwardActual Distribution of Wealth in the US Source: Adapted from the video "Wealth Inequality in America," 2012. Note: This document uses 2009 data. As of 2017, this inequality had only become greater. In this graph, the population of 300-plus million Americans is reduced to a representative group of 100 people. So, each person in this image represents 1% of the population. This group of 100 people has been lined up according to their wealth, poorest people on the left, wealthiest on the right. These 100 people have been shaded based on which 20% quintile they fall into. Then, the total wealth of the United States, which was roughly $54 trillion in 2009, was distributed among our 100 Americans. The poorest Americans don't even register, they are down to pocket change, and the middle class is barely distinguishable from the poor. 1% of America has 40% of all the nation's wealth, the bottom 80% only has 12% between them. The top 1% own half the country's, stocks, bonds and mutual funds. The…arrow_forward
- The $1.4 billion trick to make us accept income inequality Lotteries take money from the poor and redistribute it unequally. The poor, the uneducated, and minorities play the lottery the most, and it takes a big chunk of their income Source: The Huffington Post, January 12, 2016 If the news clip is correct, how does a lottery change the distribution of income? Draw two Lorenz curves to illustrate your answer. Lotteries result in the distribution of income Draw the Lorenz curve in a country that does not have lotteries. Label it Before Draw the Lorenz curve for the country after the introduction of lotteries. Label it After >>> To reposition the label click on the cross by the label box and dragging it 100 80 60 40- 20 Cumulative percentage of income 100 20 40 60 00 Cumulative percentage of households >>>Draw only the objects specified in the question Garrow_forwardSuppose the income share of the population by quintile is the following: Income Share (percent) Quintile 1 4.5 Quintile 2 14.7 Quintile 3 19.8 Quintile 4 24.0 Quintile 5 37.0 What is the Gini coefficient? Round your answer to the nearest second decimal.arrow_forwardSuppose that a society contains only two members, a lawyer named Monique and a handyman named James. Five years ago, Monique made $100,000 while James made $50,000. This year, Monique will make $300,000 while James will make $100,000. Which of the following statements about this society’s income distribution are true? a. In absolute dollar amounts, the entire distribution of income has been moving upward. b. In absolute dollar amounts, the entire distribution of income has been stagnant. c. The relative distribution of income has become more equal. d. The relative distribution of income has become less equal. The relative distribution of income has remained constant. f. The rich are getting richer while the poor are getting poorer. g. The rich are getting richer faster than the poor are getting richer.arrow_forward
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