Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

16. Income Inequality and Poverty

Lorenz Curve and Gini Coefficient

Microeconomics

16. Income Inequality and Poverty

Lorenz Curve and Gini Coefficient

Previous problem

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Multiple Choice

The country of Newland has a Lorenz curve where the area between the line of equal distribution and the Lorenz curve is 0.22 and the area below the Lorenz curve is .46. What is the Gini coefficient for Newland?

0.22

0.32

0.46

0.68

Previous problem

Verified step by step guidance

Understand that the Gini coefficient is a measure of income inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality). It is calculated using the Lorenz curve.

Recall that the Gini coefficient is defined as the ratio of the area between the line of perfect equality and the Lorenz curve to the total area under the line of perfect equality.

The total area under the line of perfect equality is 0.5, as it forms a right triangle with the axes.

Given that the area between the line of perfect equality and the Lorenz curve is 0.22, use the formula for the Gini coefficient: Gini = (Area between the line of equality and Lorenz curve) / (Total area under the line of equality).

Substitute the given values into the formula: Gini = 0.22 / 0.5, and simplify to find the Gini coefficient.