Problem Set #10
Inequality question. 10 pts.
Which distribution of income or wealth is more unequal?:
SHOW HOW YOU CALCULATE THE ANSWER.
You only need to use one method.
If you use a Lorenz curve, draw both countries on the same graph.
1: In Lower Slobovia, there are six people. One person owns 50% of the wealth and five people each own 10% of the wealth. The distribution is: (50%,10%,10%,10%,10%,10%).
2: In Upper Slobavaland, there are also six people. Two each own 40% of the wealth, one owns 20%, and the other three own no wealth. The distribution is: (40%,40%,20%,0%,0%,0%).
Which country has a more UNEQUAL distribution of wealth, Lower Slobovia or Upper Slobavaland?
Zero credit will be given if you have the wrong answer and don't show how you got it.