Figure 17-5 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 17-5. The middle 20 percent of households
A) earn 20 percent of the society's total income.
B) earn 36 percent of the society's total income.
C) earn 48 percent of the society's total income.
D) earn 50 percent of the society's total income.

Question

Figure 17-5 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 17-5. The middle 20 percent of households
A) earn 20 percent of the society's total income. 
B) earn 36 percent of the society's total income. 
C) earn 48 percent of the society's total income. 
D) earn 50 percent of the society's total income.

Quizplus · Accepted Answer

The middle 20 percent of households, often referred to as the middle quintile in income distribution, typically do not earn a proportionate share of society's total income. Instead, income distribution tends to be skewed, with the top earners receiving a disproportionately high share and the bottom earners receiving a disproportionately low share. Therefore, it is unrealistic for the middle 20 percent to earn as much as 36%, 48%, or 50% of the total income. The correct choice reflects a more realistic scenario given the common patterns of income inequality.

Figure 17-5 Shows the Lorenz Curve for a Hypothetical Country