If the Lorenz Curve were used to graph the distribution of income in an economy where all households earn the exact same income,

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3 years ago

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If the Lorenz Curve were used to graph the distribution of income in an economy where all households earn the exact same income,

the graph would show a _____.
straight line and sloped diagonally downward

curved line and sloped diagonally upward

straight line and sloped diagonally upward

curved line and sloped diagonally downward

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1 answer:

Dmitrij [34] · Answer 1 · 2022-04-13T15:31:42+03:00

If the Lorenz Curve were used to graph the distribution of income in an economy where all households earn the exact same income, the graph would show a straight line and sloped diagonally upward

Answer: Option C

<u>Explanation: </u>

Max Lorenz had developed Lorenz Curve in the year 1905 which represents graphically the income or wealth inequality in a given population. A diagonal and straight line representing parity in distribution of income, which, accompanies the Lorenz curve.

The area between curved line and the straight line showing the ratio of that area represents the inequality in the distribution of income in the population. Greater the difference between the straight line and the curve, higher is the inequality among the people with regards to the distribution of income in the economy.