A country with a population of 100,000,000 has the following income distribution:
- Everyone...
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Business, 21.05.2020 22:59, emmajobaby
A country with a population of 100,000,000 has the following income distribution:
- Everyone in the first quintile earns exactly $200/month.
- Everyone in the second quintile earns exactly $350/month.
- Everyone in the third quintile earns $600/month
- Everyone in the fourth quintile earns $1000/month
- Everyone in the fifth quintile earns $2000/month
Assume the poverty line is at $400/month.
(a) Draw the Lorenz curve for this country.
(b) Calculate the headcount ratio. Calculate the average proportional income gap and the Poverty gap index (P1).
(c) Is it important to determine whether a country's Lorenz curve is drawn before or after taxes are taken out of incomes and government-paid supplements are added back into incomes? Explain why (20 Words maximum).
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