Lorenz Curve:

Lorenz  curve  is used  to  study  the  distribution  of  personal  incomes  of  a  set  of population. The level of the inequality in the distribution of income levels can be measured by drawing a Lorenz curve. This method was developed by Max 0. Lorenz in 1905 for showing the distribution of income amongst people. The Lorenz curve is a  graph  based  on  the  cumulative distribution  of income and  shows  the proportion  of  the  distribution of  income  amongst  households. The percentage of households is plotted on the x-axis, the percentage of income on the y-axis. Thus Lorenz curve is a function of the cumulative proportion of ordered individuals mapped onto the corresponding cumulative proportion of their income. The Lorenz curve can also be used to show distribution of assets like land to indicate the prevailing social inequality. If all individuals are of the same size, the Lorenz curve is a straight diagonal line (the line AED in Fig.1. This line is called the line of equality.  If there is any inequality in size, then the Lorenz curve falls below the line of equality. The total amount of inequality  can  be  judged  by  the  area AEDF;  the  larger  the  area,  greater  is  the inequality.