The Lorenz curve is a graphical representation used to show the distribution of income or wealth within a society, illustrating the degree of income inequality. It does not explain why income differences exist, show the total amount of wealth, or explain income distribution equality.

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The Lorenz Curve

Question 94

Multiple Choice

The Lorenz curve

A) explains why some households have different incomes.
B) graphically shows the degree of income inequality.
C) graphically shows the amount of wealth in a country.
D) explains why income is equally distributed.

Correct Answer: