Chapter 31 Terms 102 - Balancing societies teeter totter:...

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Unformatted text preview: Balancing societies teeter totter: Addressing the concepts of income and wealth distribution and the difference between them. In an attempt to measure inequality. Income: A payment for labor services, or a payment for ownership of one of the other factors of production. Measuring Income Distribution: The Lorenz Curve: A geometric representation of the distribution of income. A Lorenz curve that is perfectly straight represents perfect income equality. The more bowed a Lorenz curve, the more unequally income is distributed. 1. Criticisms of the Lorenz Curve: (a) The Lorenz curve is typically presented in terms of the distribution of money income only. (b) The Lorenz curve does not account for differences in family size and effort. (c) It does not account for age in income differences. (d) The Lorenz curve is typically given for money income before taxes. (e) It does not measure unreported income from the underground economy....
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This note was uploaded on 06/06/2011 for the course ECON 102 taught by Professor Dsilvia during the Fall '11 term at Moraine Valley Community College.

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Chapter 31 Terms 102 - Balancing societies teeter totter:...

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