The Lorenz curve shows the
A)functional distribution of income
B)personal distribution of income
C)relative percentage of income going to each of the resources
D)demand for unskilled versus unskilled labor
E)cumulative percentage of income received by cumulative percentages of households

Question

Quizplus · Accepted Answer

The Lorenz curve represents the cumulative percentage of income received by cumulative percentages of households. It is used to show the level of income inequality in a society by comparing the actual distribution of income to an ideal, perfectly equal distribution. Choice A and B refer to different concepts of income distribution and are not captured by the Lorenz curve. Choice C is not related to income distribution or the Lorenz curve. Choice D refers to the demand for different types of labor and is not related to income distribution or the Lorenz curve.

The Lorenz Curve Shows the