Figure 21.2 : The above figure shows the Lorenz curves for Urbania and Ruratania.
-Refer to Figure 21.2. If area A = 2,000, area B = 400, and area C = 2,600, what is the Gini coefficient for Ruratania (rounded to two decimal places)?

Question

Figure 21.2 :  The above figure shows the Lorenz curves for Urbania and Ruratania.
-Refer to Figure 21.2. If area A = 2,000, area B = 400, and area C = 2,600, what is the Gini coefficient for Ruratania (rounded to two decimal places)?

Quizplus · Accepted Answer

The Gini coefficient is calculated as the area between the line of perfect equality and the Lorenz curve (area A) divided by the total area under the line of perfect equality (areas A and B). In this case, it is A / (A + B) = 2,000 / (2,000 + 400) = 2,000 / 2,400 = 0.8333. However, the Gini coefficient is often represented as a number between 0 and 1, where 0 represents perfect equality and 1 represents perfect inequality. Given the areas, the calculation seems to be misunderstood. The correct approach to find the Gini coefficient using areas A, B, and C is not directly provided, but typically, the Gini coefficient is 1 - 2B / (A + B + C). Substituting the given values, we get 1 - 2*400 / (2,000 + 400 + 2,600) = 1 - 800 / 5,000 = 1 - 0.16 = 0.84. This result does not match any of the provided options directly, indicating a mistake in the calculation explanation. The correct calculation for the Gini coefficient should involve the areas given but without the specific formula or values, it's challenging to directly correct the mistake without additional context or the correct formula. Given the options and typical calculations, none directly align with common methods for calculating the Gini coefficient from such areas. The correct answer should reflect the proportion of the area between the Lorenz curve and the line of equality, but without the specific figure or correct formula application, there's a misunderstanding in the explanation provided.

Figure 212 : the Above Figure Shows the Lorenz Curves