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There is a ten-person economy with a poverty line of $10,000. The incomes are (4,000, 8,000, 11,000, 12,000, 13,000, 16,000, 20,000, 26,000, 38,000, and 125,000). a) Calculate the headcount ratio

There is a ten-person economy with a poverty line of $10,000. The incomes are (4,000, 8,000, 11,000, 12,000, 13,000, 16,000, 20,000, 26,000, 38,000, and 125,000). a) Calculate the headcount ratio [2 pts.) b) Calculate the poverty gap (4 pts.] c) Calculate the poverty gap index (PGI) (4 pts.] d) Calculate the squared poverty gap index (PGI^2) [3 pts.] 8) Gini coefficients. For this section, you may use an online Gini coefficient calculator to check your work, but your written or drawn answers must include all of the steps, and you cannot Meyeball" part of your answer based on what you might see on an online calculator a) Find the Gini coefficient of a 3.person country country "a") where the incomes are (1, 1.8). using graphical methods. A complete answer to this part includes a drawing of the Lorenz curve and 45 degree line, as well as calculations that show how the Lorenz curve was created and how the areas were figured out. (6 pts.] b) Find the Gini coefficient of a 3-person country country "b") where the incomes are (0,1,5), using the double-sum formula for the Gini coefficient. (Hints: recall that distances between incomes are always non-negative, and that you should have 9 pairs of such distances when there are 3 people.) [5 pts.] c) Based on the Gini coefficients you calculated in a) and b), which country has incomes that are more equal and why? [1+1=2 pts.] Bonus: Why are medians a more meaningful measure of the central tendency of a distribution when looking at things like annual incomes or home prices?

May 12 2021 View more View Less

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