Final answer:
The Lorenz Curve is a graph that shows the distribution of income within a country. It is used to understand income inequality.
Step-by-step explanation:
The Lorenz Curve is a graph that shows the distribution of income within a country. It is used to understand income inequality. To create the Lorenz Curve, you need to convert the shares of income for each quintile into cumulative income. Then, plot the cumulative income on the x-axis and the cumulative share of income on the y-axis.
For example, let's say we have the following data from Table 15.6:
Quintile 1: Share of income = 0.10, Cumulative income = 0.15
Quintile 2: Share of income = 0.20, Cumulative income = 0.40
Quintile 3: Share of income = 0.30, Cumulative income = 0.70
Quintile 4: Share of income = 0.25, Cumulative income = 0.95
Quintile 5: Share of income = 0.15, Cumulative income = 1.00
Plotting these points on a graph and connecting them will give you the Lorenz Curve.