Draw the line of equality and the lorenz curve

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Reference no: EM131084983

Consider the following distribution of income in a 12-person economy, with the modern urban wage = 3, the traditional rural income = 1 and the informal urban wage = 2: (1, 2, 3, 1, 2, 3, 1, 2, 3, 1, 2, 1). The poverty line is at 1.5.

Derive the table (share of total population as a percentage and share of total income as a percentage) to show income distribution data for this economy. Based on your table, draw the Line of Equality and the Lorenz Curve for this economy. Label every point on the Lorenz curve and your graph.

What is the level of absolute poverty in this economy? Show your work. What policy (only one) would you adopt to mitigate absolute poverty? Justify your policy.

Reference no: EM131084983

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