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In country A, the poorest 20% of the population earn 10% of the income and in...

In country A, the poorest 20% of the population earn 10% of the income and in country B the poorest 20% of the population earn 15% of the income. Using what we talked about regarding the Gini coefficient, explain which country most likely has greater income inequality.

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Answer #1

Inequaity of income is greater in Country A then Country B

Lorenz Cure and gini Coeffiecnt

Lorenz curve refers to the graphical method that show the representation of detee of income inequality of a country.

It plots te point of cumulative share of income arned by the poorest x% of the population in Y-axis , for all possible values of x. The 45° line shows the line of equality, when income is distribute equally among all individuals. If, income is not distributed equally, then the lower x% of individuals earn < x% of total income in the geographical boundary(Country), this implying that Lorenz curves typically lies below the 45° line.

For any query please comment and please upvote.thank you in advance.

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