Answer:
a. The income inequality ratio in Mill Town is 14.06%.
b. The income inequality ratio in Pasture Town is 11.77%
c. Mill Town therefore has the more unequal distribution of income
Explanation:
Note: Kindly see the attached file for the calculation of the standard deviation and the mean.
The income equality can be determined using the Coefficient of variation (CV) for stated as follows:
IE = SD ÷ Mean ........................................... (1)
Where,
IE = Income inequality
SD = Standard deviation
In more equal societies, IE will be smaller.
We can therefore proceed as follows:
a. What is the income inequality ratio in Mill Town?
SD = 8,857
Mean = 63,000
IE = 8,857 ÷ 63,000 = 0.1406, or 14.06%
b. What is the income inequality ratio in Pasture Town?
SD = 8,353
Mean = 71,000
IE = 8,353 ÷ 71,000 = 0.1177, or 11.77%
c. Which community has the more unequal distribution of income?
Since the 14.06% income inequality ratio of Mill Town is higher than 11.77% income inequality of Pasture Town, Mill Town therefore has the more unequal distribution of income.
