Question

Economists use a cumulative distribution called a Lorenz curve to describe the distribution of income between households in a given country. Typically, a Lorenz curve is defined on the x-interval?

Answer 1

A Lorenz curve is a cumulative distribution used by economists to describe the income distribution between households. It shows the cumulative shares of income received by everyone up to a certain quintile and can indicate changes in income inequality over time.

Step-by-step explanation:

A Lorenz curve is a cumulative distribution that economists use to describe the distribution of income between households in a given country. It graphs the cumulative shares of income received by everyone up to a certain quintile. Typically, a Lorenz curve is defined on the x-interval.

In a Lorenz curve diagram, a more unequal distribution of income will loop farther down and away from the 45-degree line, while a more equal distribution of income will move the line closer to the 45-degree line. The curve provides a visual representation of the income distribution and can show how it changes over time.

For example, if we compare the Lorenz curve for the U.S. income distribution in 1980 and 2020, we can see that the curve for 2020 is farther from the 45-degree line, indicating greater inequality compared to 1980.