d ng.cengage.com/static/nb/ui/index.htimnb 5% MINDTAP Homework (Ch 20) Due on De
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d ng.cengage.com/static/nb/ui/index.htimnb 5% MINDTAP Homework (Ch 20) Due on Dec 10 at 11 PM CS Back to Assignment Attempts: Average: 15 1. Income inequality and the poverty rate The following table summarizes the income distribution for the town of income group earns an annual income of $42,350 for an individual Perkopia, which has a population of 10,000 people. Every individual within an the same income, and the total annual Income in the economy is $500,000,000. Suppose that in 2004, the poverty line is set at Share of Total Income in Perkopia (Percent) Year Lowest Quintile Second Quintile Middle Quintile Fourth Quintile Highest Quintile 1998 2004 2010 2016 3.0 8.6 9.4 9.7 11.0 14.0 14.6 15.2 15.5 21.9 22.4 22.9 25.0 52.5 50.2 48.4 43.5 3.8 5.0 The data in the table suggest that there was income inequality from 1998 to 2016.Explanation / Answer
a) The data in the table suggest that there was STABLE income inequality from 1998 to 2016.
b) For Total Income multiply the share of income percentage in the corresponding quintile by the total annual income, that is, $500,000,000.
Given the total population is 10,000 we get 2000 individuals each under each quintile. We divide the Total income from the first step by 2000 for each category.
Total Income Individual Income Below poverty line
17,000,000 8500 Yes
47,000,000 23,500 Yes
73,000,000 36,500 Yes
112,000,000 56,000 No
251,000,000 125,000 No
c) 100%
d)100%
e) The $2000 in aid presents a disincentive for Valerie to make more than $42,350 per year.
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