Question

A Lorenz curve showing perfect equality in the distribution of income:

A) coincides with the horizontal axis.
B) coincides with the vertical axis.
C) is a straight line with a 45-degree angle.
D) is a curve bowed to the southwest.

Answer 1

Answer:

Option (C) is correct.

Explanation:

Lorenz curve is a graphical representation of percentage of total national income on the y-axis and percentage of total population. This curve shows us the degree of inequality of income distribution. It is one of the crucial measure of poverty.

In a inequality income distribution graph, there is a straight diagonal line at 45 degree angle and the Lorenz curve. The larger the difference between these two curves, the larger will be the inequality in the income distribution.