The Lorenz curve is a graphical representation that shows the distribution of income or wealth within a society, illustrating the proportion of total income earned by cumulative percentages of the population. It is a relative measure of income inequality, as it compares the distribution of income to a perfectly equal distribution.

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The Lorenz Curve

Question 29

Multiple Choice

The Lorenz curve:

A) is an absolute measure of income inequality.
B) is a relative measure of income inequality.
C) takes into account changes in the standard of living.
D) has elements of absolute and relative measures.

Correct Answer: