Using the Lorenz Curve, the Degree of Income Inequality Is

question 3

Multiple Choice

Using the Lorenz curve, the degree of income inequality is measured by

• A)The line connecting all points for which a given percentage of families receives exactly the cumulative
• Percentage of income
• B)the distance of the Lorenz curve from the line of perfect equality
• C)the flat diagonal line that applies to a perfectly elastic demand curve
• D)the number of times the Lorenz curve crosses the line of perfect equality
• E)is derived by dividing the number of people below the poverty line by the total population

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Definitions:

Unions Declined

A trend observed in some countries or industries where the influence, membership, or power of labor unions decreases over time.

Efficiency Wages

Wages set above the market level to increase worker productivity and reduce turnover.

Principal-Agent Problem

A dilemma in economics where one party (the agent) is able to make decisions on behalf of, or that impact, another party (the principal), potentially leading to conflicts of interest.

Derived Demand

Refers to the demand for a good or service that arises from the demand for another good or service.