#1 Calculating inequality. Which distribution of income is more un equal?: 1: In

Question

#1 Calculating inequality.

Which distribution of income is more unequal?:

1: In Lower Slobovia, there are six people. One person owns 50% of the wealth and five people each own 10% of the wealth. The distribution is: (50%,10%,10%,10%,10%,10%).

2: In Upper Vulcania, there are also six people. Two each own 40% of the wealth, one owns 20%, and the other three own no wealth. The distribution is: (40%,40%,20%,0%,0%,0%).

Which country has a more UNEQUAL distribution of wealth, Lower Slobovia or Upper Vulcania?

SHOW HOW YOU DETERMINE THE ANSWER.

Explanation / Answer

The situation in Lower Slobovia may be summarized as follows:

The blue curve in the following figure is the Lorenz Curve.

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