A Lorenz Curve Can Be Used to Illustrate

question 48

Multiple Choice

A Lorenz curve can be used to illustrate

• A) the income effect.
• B) the distribution of income.
• C) the substitution effect.
• D) the supply of labour.

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Definitions:

DFL

Degree of Financial Leverage, a ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income due to changes in its capital structure.

EBIT

Earnings Before Interest and Taxes, a financial measure that calculates a company's profitability based on its operations without the effects of interest and taxes.

Contribution Margin

The selling price per unit minus the variable cost per unit, used to cover fixed costs and to generate profit.

Breakeven

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.