<Income Inequality>
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P a g e
Problem Set 9
Q1.
In a certain country, the population consists of five green people and five blue people.
Each green person has an income of $1 per year. Each blue person has an income of $3
per year.
(a) Draw a Lorenz curve for this country.
(b) On your diagram, indicate clearly what area you would divide by what other area to
calculate the Gini coefficient.
(c) Calculate the Gini coefficient.
Q2.
Many companies are working to perfect “distance learning” technology, by which a single
professor can teach students at dozens or even hundreds of colleges and universities.
Using an appropriate framework, explain how such a technological change would affect
the distribution of income among professors.
Q3.
How
would
the
availability
of
student
loans
to
finance
education
influence
the
relationship between inequality and the accumulation of factors of production?
Q4.

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