Gce Model Questions Vol1 2017 Economics Question 30

Practice objective / multiple choice question 30 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Hard Difficulty
Question 30 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

In a developing country personal incomes follow a Pareto distribution with shape parameter \( \alpha = 2.5 \) and minimum income \( x_{\min} = £500 \). The national poverty line is £2000. (a) What proportion of the population is below the poverty line? (b) If a policy raises the minimum income to £800 while leaving \( \alpha \) unchanged, what is the new proportion below the poverty line? (c) By what percentage does the poverty proportion fall as a result of the policy? Give all answers as percentages to one decimal place.

Answer Options

A. a) 97.2 %; b) 90.5 %; c) 6.9 % reduction
Correct Answer B. a) 96.9 %; b) 89.9 %; c) 7.2 % reduction
C. a) 95.4 %; b) 88.1 %; c) 7.3 % reduction
D. a) 96.0 %; b) 89.0 %; c) 7.5 % reduction
Correct Answer
B
Correct Option:
a) 96.9 %; b) 89.9 %; c) 7.2 % reduction

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 30. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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