Figure 16.6 Figure 16.6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 16.6.If area X = 2060, area Y = 240, and area Z= 2700, calculate the Gini coefficient for Syldavia.

Question

Figure 16.6  Figure 16.6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 16.6.If area X = 2060, area Y = 240, and area Z= 2700, calculate the Gini coefficient for Syldavia.

Quizplus · Accepted Answer

To calculate the Gini coefficient for Syldavia, we need to use the formula 
G = (A/(A+B)) 
where A is the area between the diagonal (the line of perfect equality) and the Lorenz curve and B is the area under the Lorenz curve.

In this case, A = area X = 2060 and B = area X + area Y + area Z = 5000.

So, 
G = (2060/5000) = 0.412

The Gini coefficient is always expressed as a number between 0 and 1, so we need to multiply by 2 to get the final answer: 
Gini coefficient for Syldavia = 2*0.412 = 0.824

Therefore, the best choice is C, with an explanation as given above.

Figure 166 Figure 16