Question

What is the average income of an economy with a Gini coefficient of 0.2 and a covariance between income and cumulative distribution of income equal to 180?

Answer 1

Average Income = $450

Step-by-step explanation:

The Gini coefficient is an index of measuring inequality of inome or wealth distribution among population within countries and between countries.

Gini Coefficient = Covariance between income and cumulative distribution of income / 2 (average income) . It implies, Average income = Covariance between income and cumulative distribution of income / 2 Gini coefficient

Average income = 180 / 2*0.2

Average income = 180 / 0.4

Average Income = $450

Hence, the average Income of the economy is $450.