Which of the following summarizes the information provided by a Lorenz curve?
A)the Lorenz coefficient
B)the income distribution ratio
C)the Gini coefficient
D)the slope (the rise divided by the run)of the Lorenz curve at a particular point on the curve

Question

Quizplus · Accepted Answer

The Lorenz curve plots the cumulative share of income against the cumulative share of households in a population. The Gini coefficient, which can be derived from the Lorenz curve, summarizes the income inequality in a population. It measures the ratio of the area between the Lorenz curve and the perfect equality line (which represents a situation where everyone has an equal share of income) to the area below the perfect equality line. A higher Gini coefficient indicates greater income inequality.

Which of the Following Summarizes the Information Provided by a Lorenz