If Everybody Had the Same Income, the Lorenz Curve Would

question 39

Multiple Choice

If everybody had the same income, the Lorenz curve would

• A)be a curve that intersects the line of income equality at the point at which 50 percent of the population earns 50 percent of the income.
• B)be the line of income equality.
• C)bow down below the line of income equality.
• D)bow up above the line of income equality.
• E)be a line below and parallel to the line of income equality.

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Definitions:

Production

The method of producing products and services by merging work, materials, and technology.

Inefficient Allocations

Situations where resources are not optimally distributed, often leading to waste or unmet potential within an economy or system.

Price Ceilings

A cap set by the government on the maximum price that can be asked for a good, service, or resource.

Producer Surpluses

The difference between the actual price a producer receives for a product and the minimum price they would be willing to accept.