In a Lorenz Diagram for Income, the Line of Equality

question 277

Multiple Choice

In a Lorenz diagram for income, the line of equality shows

• A) the most equitable income distribution.
• B) how unequally incomes are distributed.
• C) how much redistribution occurs.
• D) the income distribution if everyone received the same income.

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Definitions:

MC = P

A condition in economic theory where Marginal Cost (MC) equals Price (P), indicating optimal production levels where no additional units should be produced.

Profit

The financial gain obtained when the total revenues generated exceed the total costs incurred by a business.

Marginal Cost

The growth in total expenses incurred from the production of one more unit.

Output

The total amount of goods or services produced by a firm or country.