Question

What is plotted against the cumulative proportion of the population on a Lorenz curve?

• A. Average income
• B. Cumulative proportion of consumption/income
• C. Median income
• D. Total GDP

Answer 1

Answer:

B. Cumulative proportion of consumption/income

• The Gini-coefficient gives the summary figure for Lorenz curve which first ranks the population according to different levels of consumption/income and then plots the 'cumulative proportion of consumption/income against the cumulative proportion of the population enjoying that level of consumption/income.

• The Gini coefficient takes the theoretical maximum value of 1 when in a population the income level of every individual except one is zero.