This textbook is available at## Exploring Economics (7th Edition)

Book Edition | 7th Edition |

Author(s) | Sexton |

ISBN | 9781285859439 |

Publisher | Cengage Learning |

Subject | Economics |

In Text Question

In Text Question

Figure Question

INTERACTIVE SUMMARY

PROBLEMS

Chapter 17, Section 17.1, In Text Question, Exercise 01

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What does the Lorenz curve illustrate?

**Solution**

**The solution: **Income inequality or wealth inequality

**Explanation**

A **Lorenz curve** is defined as a graphical representation of income inequality or wealth inequality that was developed by American economist Max **Lorenz** in 1905. The **graph** plots percentiles of the population on the horizontal axis according to income or wealth. The Lorenz curve is sometimes accompanied by a straight diagonal line with a slope of 1, which portrays or depicts a perfect equality in income or wealth distribution; the Lorenz curve lies beneath it, showing the observed or estimated distribution. The area amid the straight line and the curved line, expressed as a ratio of the area under the straight line,** is the Gini coefficient, which is **a scalar measurement of inequality.

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