If Everyone Earned the Same Income, the Lorenz Curve Would

question 245

Multiple Choice

If everyone earned the same income, the Lorenz curve would be

• A) a rectangular hyperbola.
• B) a straight line from the origin at a 45-degree angle.
• C) the horizontal axis.
• D) very bowed from the diagonal.

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Definitions:

Producer Surplus

The difference between the amount a producer is willing to accept for a good and the actual amount received due to higher market price.

Consumer Surplus

The discrepancy between the potential total expenditure consumers are willing to make on a good or service and the actual costs they incur.

Government Revenue

The total income received by the government from various sources, including taxes, fees, fines, and the sale of goods and services.

Domestic Demand Curve

A graphical representation of the quantity of goods and services demanded by domestic consumers at various price levels.