Question:
Which one of the following economic issues can be evaluated with the use of a Lorenz curve?
(1) The allocative and productive efficiencies in markets
(2) The comparative advantage in trading partners and the terms of trade
(3) Degree of specialization and growth within countries
(4) The equilibrium of market prices
(5) The degree of inequity in income distribution
Correct Answer:
(5)
Answer Explanation:
The Lorenz curve is a graphical representation used extensively in economics to map the distribution of wealth or income within a population. The further the curve sags away from the 45-degree line of perfect equality, the greater the degree of inequity in income distribution.
Topic: Inequality Year: 2019
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