-Using the Table Provided Above to Construct Lorenz Curves Representing

question 254

Multiple Choice

-Using the table provided above to construct Lorenz curves representing 1990 and 2011, what do you discover and how is this interpreted?

• A) The Lorenz curve for 1990 is further away from the line of equality than the curve for 2011. This means that inequality is decreasing.
• B) The Lorenz curve for 1990 is further away from the line of equality than the curve for 2011. This means that inequality is increasing.
• C) The Lorenz curve for 2011 is further away from the line of equality than the curve for 1990. This means that inequality is increasing.
• D) The Lorenz curve for 2011 is further away from the line of equality than the curve for 1990. This means that inequality is decreasing.

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Definitions:

Marginal Utility

Additional gratification or utility that comes from consuming one more unit of a product or service.

Consumer Behavior

The study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences.

Assumptions

Pre-established beliefs or statements taken as true without proof, used as foundational elements in theories, models, and analyses to simplify complex realities.

Indifference Map

A graphical representation of different combinations of goods between which a consumer is indifferent, showing levels of utility.