Neco Model Questions Vol1 2022 Economics Question 30
Practice objective / multiple choice question 30 from the 2022 Neco Model Questions Vol1 Economics examination.
A country's income distribution is approximated by the Lorenz curve \(L(p)=0.5p^{2}+0.3p\), where \(p\) is the cumulative proportion of the population (\(0\le p\le1\)).\n(a) Compute the Gini coefficient for this distribution.\n(b) A policy reduces the income of the top 20 % of the population by 10 % and redistributes the amount equally among the bottom 40 %. Assuming total income remains unchanged and the Lorenz curve adjusts linearly over the affected segments, estimate the new Gini coefficient and the change \(\Delta G\).
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This is Neco Model Questions Vol1 2022 Economics Question 30. It is one of the objective questions from the 2022 Neco Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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