Task: Consider a 12-person stylized dual economy with the following income distribution:
(1,1,1,1,1,1,1,1,1,4,4,4,4)
Problem 1: Graph the Lorenz curve.
Problem 2: Calculate The Gini coefficient
Problem 3: Now suppose the incomes of two members increase from 1to 4. Graph the Lorenz curve (you may use your graph in part1, distinguish which curve applies here.)
Problem 4: What kind of growth is this: traditional sector enrichment, modern sector enrichment, modern sector enlargement, or modern sector international effect?
Problem 5: Can you say what has happened to inequality?
-Suppose everybody increases by 10%. what happens to inequality? justify the answer.