Multiple Choice
In the country of Konswano there are 4 people. Each person lives for 40 years. In their first 10 years, they earn no income. In the next 20 years, they earn $40,000 per year and in the last 10 years they earn no income. Each year their consumption is $20,000. If everyone in Konswano is 25 years old, then the Lorenz curve for income is
A) above the Lorenz curve for wealth.
B) above the line of equality.
C) equal to the line of equality.
D) below the Lorenz curve for wealth.
Correct Answer:
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