Economics 428/528 Assignment 5 Answer Key
Note:
Write substantive answers, in whatever style you consider the most effective: do not try
to fill in space with aimless speculation. The grading function is symmetric and additively
separable over questions, and it is convex. You are expected to upload your answers as a
single file to Moodle.
Important:
Feel free to discuss questions with each other, but you are
NOT
allowed to solve
them together. Making same mistakes in a similar order will be judged as plagiarism that will
not be tolerated and be sanctioned according to the Student’s Code of Misconduct. You need
to write down your own original answers and submit them to Moodle as a single file
. You can
use a software (ex: Word or Latex) to type your answers or scan your handwritten answers
into a pdf file. In the latter case, you are responsible for the quality of scanning. Late
submissions are
NOT
accepted!
1.
Measures of Income Inequality:
Consider the following (very roughly measured)
distribution of income in the economy:
Share of Households
Cumulative Share of Income
0
0
½
¼
1
1
Thus, the distribution function says that the lower half of the households earns one fourth
of the total income in the society.
a.
Draw the Lorenz-curve for the economy.
b.
Calculate the Gini-coefficient.
c.
Search various income inequality measures of Kazakhstan online and report them
(also give the sources). How do they compare to the levels of income inequality in th
