Using the Lorenz curve, the degree of income inequality is measured by
A)The line connecting all points for which a given percentage of families receives exactly the cumulative percentage of income
B)the distance of the Lorenz curve from the line of perfect equality
C)the flat diagonal line that applies to a perfectly elastic demand curve
D)the number of times the Lorenz curve crosses the line of perfect equality
E)is derived by dividing the number of people below the poverty line by the total population

Question

Quizplus · Accepted Answer

The distance of the Lorenz curve from the line of perfect equality represents the degree of income inequality. The closer the Lorenz curve is to the line of perfect equality, the more equal the distribution of income. Conversely, the further away the Lorenz curve is from the line of perfect equality, the greater the degree of income inequality.

Using the Lorenz Curve, the Degree of Income Inequality Is