ecn204-06-problems

ecn204-06-problems - ECN 204 - Winter 2008 Brennan Thompson...

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Unformatted text preview: ECN 204 - Winter 2008 Brennan Thompson Practice Problems for Topic 6 1. The following table shows the Gini coefficient for four different countries: Country Gini coefficient Alpha 0.5 Beta 0.2 Gamma 0.7 Delta 0.4 Which country has the highest level of inequality? 2. The following table shows the income distribution for a hypothetical economy in three different years: Cumulative Share of Income (%) Quintile 1985 1995 2005 Bottom 20% 5 4 6 Second 20% 18 14 17 Middle 20% 32 28 36 Fouth 20% 62 56 60 Top 20% 100 100 100 According to the Lorenz criterion, which year had the highest level of inequality? 3. The following table gives incomes for three different societies: Individual Alpha Beta Gamma 1 4 16 4 2 25 9 4 3 16 16 36 Suppose that each individual in these societies has utility given by U ( y ) = y , where y is income. Which society would a utilitarian prefer? 4. Refer to the previous question. If each individual in these societies has utility given by U ( y ) = y 2 , which society would a utilitarian prefer?, which society would a utilitarian prefer?...
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ecn204-06-problems - ECN 204 - Winter 2008 Brennan Thompson...

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