Microeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859484
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
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Question
Chapter 19, Problem 12E
To determine
(a)
To explain:
Whether it is expected to see a case in which Gini coefficient for a nation is smaller than the average of the Gini coefficients for all nations.
To determine
(b)
To explain:
Whether it is expected to see a case in which the Gini coefficient for income distribution among nations is larger than the average of all nations.
To determine
(c)
To explain:
Whether it is expected to see a case in which Gini coefficient is zero.
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The table shows the distribution of market income.
Suppose the government redistributes income by taxing
the 60 percent of households with the highest market
incomes 10 percent, then distributing the tax collected
as an equal benefit to the 40 percent with the lowest
market income.
What percentage of total market income is redistributed
to the second 20 percent of households?
What is the income share of the third 20 percent of
households after tax and redistribution?
>>> Answer to 1 decimal place.
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The second 20 percent of households receives benefits
equal to percent of total market income.
The third 20 percent of households earns percent of
total income after tax and benefits.
I
point(s)
Households
Lowest 20 percent
Second 20 percent
Third 20 percent
Fourth 20 percent
Highest 20 percent
Market income
(percentage of total
market income)
5
9
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36
Next
1. How does the population of a low-income country such as Ethiopia differ from that of a high-income nation such as the United States in terms of poverty? Do you think the people living in high-income nations have a responsibility to address poverty in the rest of the world ? If so, why? If not, why not?
What are some contributors to the poverty cycle in your local community? How can we balance inequalities of power between nations?
Chapter 19 Solutions
Microeconomics (MindTap Course List)
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