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Todaro & Smith – Economic Development 12th edition

Problem set – Chapter 5

The following income distribution data are for Brazil.

Quintile Percent Share

Lowest 20% 3.0%
Second quintile 6.9%
Third quintile 11.8%
Fourth quintile 19.6%
Highest 20% 58.7%
Highest 10% 43.0%

 

  1. 1. Carefully graph the Lorenz curve, labeling the axes.
  2. 2. Explain how to find the Gini coefficient, graphically.
  3. 3. Brazil’s national income is about $300 billion. What is the approximate dollar income of the bottom 20%? Bottom 40%?
  4. 4. Brazil’s population is approximately 150 million. Suppose that each household makes the average income for its quintile. What is the level of poverty if the poverty line is $400 per capita?
  5. 5. Suppose one percent of national income were transferred from the richest 20% of households to the poorest 20% of households. Show the effect on relative inequality. Under the same transfer, what is the effect on poverty?

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