Question

in your own words explain the purpose of the Lorentz curve. why is this as important diagram when comparing data from year to year?

Answer 1

L A lorena curve is a graphical representation of income distribution within an economy. It shows the cumulative share of income from different sections of the population. p100%; aumulative Ahau income % line of equality (us) Los % household by unome distribution at the line of perfect equality if everyone had some salary - the poorest 10% would gain 10% of the total. income and poolest 80% would gain 80% of the total population. The line nearer the lorenz curve is to the of mequality the less unequal the

economy is. It can be used to calculate Gini coefficient which is another vati measure of inequality V 100% A lovny coure Too'. aimn. untome of income distribution Gine coefficient = A where smaller the area under A the less is gini coefficienten and less is the inequality. The value of the Gini coefficient lies between zero and one

Lorenz curre is an important diagram to measure inequalites. in a country. By comparing data from year to year we find out how much has the govemment policies succeeded to in decreasing the gap between sich and poor. As mentioned above the value of gini coefficient is calculated through lovens cure which helps us find out the level of inequality within a country and also helps in comparision among different countries.