A Lorenz Curve

question 122

Multiple Choice

A Lorenz curve

• A) is identical to the straight line sloping up at a 45° angle.
• B) lies above the straight line sloping up at a 45° angle.
• C) lies below the straight line sloping up at a 45° angle.
• D) starts below the straight line sloping up at a 45° angle and then ends above this line.
• E) starts above the straight line sloping up at a 45° angle and then ends below this line.

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Definitions:

Long-Run Equilibrium

A state in an economy or market where, given the long-term flexibility of prices and adjustment of all input factors, supply equals demand and all firms earn normal profits.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Average Total Cost

The total cost of production divided by the total output, representing the cost per unit of output.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, leading to competition based on product differentiation.