The Greater the Area Between the Lorenz Curve and the Diagonal

question 25

True/False

The greater the area between the Lorenz curve and the diagonal line of absolute equality,the more inequality exists.

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Definitions:

Activity

Any action or task undertaken by individuals or groups, often resulting in production or consumption of goods or services.

External Costs

Costs of economic activities that affect third parties outside the transaction, which are not reflected in market prices.

Tax

A compulsory financial charge or levy imposed by a government on individuals or entities to fund public expenditures.

Negative Externality

Occurs when a decision by an individual or firm results in unwanted negative effects on another party not involved in the decision.