None The following table provides selected points on the Lorenz curve for the 2018US wealth distribution, downloaded from the World Inequality Database:XL(x)00.90.29320.990.65100.9990.82070.99990.90550.999990.9531111. Compute the fraction of wealth controlled by the top 10% of(a) The entire population(b) The top 10%(c) The top 1%(d) The top 0.1%(e) The top 0.01%2. Based on your answers to (1), is the wealth distribution in the UnitedStates well-approximated by a Pareto distribution? If so, which part ofthe distribution is approximately Pareto?3. Assuming that the US wealth distribution is indeed Pareto, at least forthe top 0.01%, use your answer from 1.e to estimate the PLE.4. Recall that the best source of wealth data in the U.S. is the Survey ofConsumer Finances (SCF). A shortcoming of the SCF is that (for privacyreasons) it does not include people on the Forbes 400 list of wealthiestpeople. Using the PLE from (3), estimate the fraction of wealth controlledby the 400 wealthiest families in 2018. In 2018, there were approximately127.9 million households in the US.

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Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter12: Income Distribution, Poverty, And Discrimination

Section: Chapter Questions

Problem 17SQ

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If a country had perfect income equality what would the Lorenz curve look like?
Canada had the following distribution of Income after taxes in 2006 Based on the information in the tables, which one is the correct Gini coefficient of income inequality? Deciles cumulative share of income Lorenz curve for after tax income in Canada 0% (2006) 1 0% 1 2 2%| 3 6% 0.8 4 11% 0.6 18% 0.4 26% 0.2 37% 50% 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 9 67% share of population 10 100% cumulative share of income equidistribution line O a. 0.47 O b. 0.43 O c. 0.42 O d. 0,44 O e. 0.23 O share of income
A group of 10 people have the following annual incomes: $24, 000, $18, 000, $50, 000, $100, 000, $12, 000, $36, 000, $80, 000, $10, 000, $24, 000, $16, 000. Calculate the share of total income that each quintile receives from this income distribution. What percent of the total income is represented by the highest quintile? Round your answer to the nearest tenth. Provide your answer below:
Scientists studying the economics of a country, community, or group of people are often interested in the distribution of wealth, where wealth is understood to mean the income or the personal assets of individual households. A powerful tool for illustrating how wealth is distributed across a society is the Lorenz curve (invented by the American economist Max Otto Lorenz in 1905). A typical Lorenz curve is given by y = L(x), where 0 < x < 1 and 0 < y < 1. The variable I represents the fraction of all households in the society and y = L(x) represents the fraction of the total wealth that is owned by the fraction x of the society. For example, for the Lorenz curve shown in Figure 1, we see that L(0.5) = 0.2, which means that 0.5 (50%) of the society owns 0.2 (20%) of the wealth. bottom botom y A 1- Line of perfect equality 0.8 of households control 0.6 of the wealth. Lorenz curve 0.5 of households control 0.2 of the wealth. 0.2 B 0.5 0.8 a1 1 Fraction of Households Figure I Fraction of…
The term obtained by dividing the area of inequality shown by a Lorenz curve by the area of the right-triangle formed by the axes and the diagonal (the line of equality).
Actual 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…
What is the urban inequality rate compared to national inequality rate in Rio de Janeiro? Give a comparison of urban poverty and urban inequality rates in Rio.
The income distribution for a certain country in 1996 was estimated by the function f(x) = 0.66x2 +0.34x. In 2000 the income distribution was estimated by the function f(x) = 0.3x 0.72x2 -0.02x3 a. Find the coefficient of inequality for each of the years 7. b. Which year had a more equitable income distribution? Why?
2.1 In an effort to make the distribution of income more nearly equal, the government of a country passes a tax law that changes the Lorenz curve from y = 0.97x for one year to y = 0.33x + 0.67x for the next year. Find the Gini coefficient of income for both years. (Round your answers to three decimal places.) before after Compare the distributions of income before and after the tax law was passed. Interpret the result. O The change increases the difference in incomes. The change makes no difference in incomes. O There is not enough information to compare the incomes. The change decreases the difference in incomes. O The change makes the incomes equal. Need Help? Read It
Consider the Lorenz curves for income for Deneb and Elnath as shown in this figure: Lorenz curves for Deneb and Elnath cumullative income share (%) 8 8 2 2 2 2 2 2 2 2 100 90 80 70 60 40 30 Lorenz curve for Elnath 0 0 10 20 30 40 50 60 70 80 90 100 income percentiles Lorenz curve for Deneb [If the image above doesn't appear click here to open it in a new tab.] Which of the following statements is true? [Hint: You do not need to calculate any areas to answer this question correctly!] The relative income inequalities of Deneb and Elnath cannot be determined from the information given. Income inequality is more extreme in Deneb than it is in Elnath. Deneb and Elnath have the same degree of income inequality. Income inequality is more extreme in Elnath than it is in Deneb.
2.2 = X Suppose that the Lorenz Curve for country A is given by yA and for country B is yB mine which of the two countries has greater inequality in its income -0.3x2 + 0.7x. Use the Gini index to deter- distribution.
A typical Lorenz Curve, extracted from the Textbook, is shown below: e 100 Lorenz curve (actual distribution) 60 Perfect equality 40 B 20 Complete inequality D 0 20 40 60 80 100 Percentage of households Point d on the curve is best explained as 55% of households earn about 55% of the national income 50% of households earn about 80% of the national income 80% of households earn about 80% of the national income 80% of households earn about 55% of the national income Percentage of Income 80

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