ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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In the presence of externalities, an economy can always reach an efficient solution as long as transaction costs are low.
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A geometric representation of the share distribution of income among families in a given country at a given time.
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An index between 0 and 1 derived from the Lorenz curve. 0 = income is perfectly equally distributed. 1 = income is one controlling all income.
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None of the above
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Detailed explanation-1: -A Lorenz curve is a graphical representation of the distribution of income or wealth within a population. Lorenz curves graph percentiles of the population against cumulative income or wealth of people at or below that percentile.
Detailed explanation-2: -The Lorenz curve is a geometric representation of the. share distribution of income among families in a given country at a given time.
Detailed explanation-3: -The Lorenz Curve shows the degree of income inequality in a given economy or population.
Detailed explanation-4: -The “Lorenz curve” is a common graphical method of representing the degree of income inequality in a country [9]. It plots the cumulative share of income (y axis) earned by the poorest x% of the population, for all possible values of x (see the Illustration for a practical example).
Detailed explanation-5: -Lorenz curve is a graphical representation of income distribution. It is a measure of the deviation of actual distribution from the line of equal distribution.