1. Income inequality and the poverty rate The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2006, the poverty line is set at an annual income of $43,275 for an individual. Share of Total Income in Perkopia (Percent) Second Quintile Middle Quintile Fourth Quintile Lowest Quintile Highest Quintile Year 1994 3.2 8.0 14.0 21.8 53,0 2000 3.5 9.0 14.9 22.4 50.2 2006 3.8 9.6 15.0 22.7 48.9 2012 4.0 10.0 16.5 24.0 45.5 income inequality from 1994 to 2012 The data in the table suggest that there was W Complete the following table to help you determine the poverty rate in Perkopia in 2006. To do this, begin by determining the total income of all individuals in each quintile using the fact that total annual income in the economy is $500,000,000. Next, determine the income of an individual in each quintile by dividing the total income of that quintile by the number of people in that quintile. (Hint: Recall that Perkopia has a population of 10,000 people.) Finally, determine whether the individual income for each quintile falls below the poverty line of $43,275. Share of Income in 2006 Total Income Individual Income (Percent) Quintile (Dollars) (Dollars) Below Poverty Line? Lowest 3.8 Second 9,6 Middle 15.0 Fourth 22.7 Highest 48.9 Using the information in the previous table, the poverty rate in Perkopia in 2006 is PPPM Suppose that the government introduces a welfare program in which any individual with an income of less than $43,275 per year receives a lump-sum transfer payment of $7,000 from the government. Assume that, in the short run, there is no change in labor-supply behavior among the people in Perkopia In the year 2006, the poverty rate after the introduction of the welfare program in Perkopia is Again, suppose the government introduces a welfare program in which any individual with an income of less than $43,275 receives a lump-sum transfer payment of $7,000 from the government. Frances, a resident of Perkopia who currently earns an income of $42,474, has the opportunity to work overtime and earn an additional $1,500 this year. Which of the following statements are correct? Check all that apply. Frances would gain more income by turning down the overtime than she would if she accepted the overtime The $7,000 in aid creates a disincentive for Frances to earn more than $43,275 per year. Save &Continue Grade It Now Continue without saving 1. Income inequality and the poverty rate The following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within an income group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2006, the poverty line is set at an annual income of $43,275 for an individual. Share of Total Income in Perkopia (Percent) Second Quintile Middle Quintile Fourth Quintile Lowest Quintile Highest Quintile Year 1994 3.2 8.0 14.0 21.8 53,0 2000 3.5 9.0 14.9 22.4 50.2 2006 3.8 9.6 15.0 22.7 48.9 2012 4.0 10.0 16.5 24.0 45.5 income inequality from 1994 to 2012 The data in the table suggest that there was W Complete the following table to help you determine the poverty rate in Perkopia in 2006. To do this, begin by determining the total income of all individuals in each quintile using the fact that total annual income in the economy is $500,000,000. Next, determine the income of an individual in each quintile by dividing the total income of that quintile by the number of people in that quintile. (Hint: Recall that Perkopia has a population of 10,000 people.) Finally, determine whether the individual income for each quintile falls below the poverty line of $43,275. Share of Income in 2006 Total Income Individual Income (Percent) Quintile (Dollars) (Dollars) Below Poverty Line? Lowest 3.8 Second 9,6 Middle 15.0 Fourth 22.7 Highest 48.9 Using the information in the previous table, the poverty rate in Perkopia in 2006 is PPPM Suppose that the government introduces a welfare program in which any individual with an income of less than $43,275 per year receives a lump-sum transfer payment of $7,000 from the government. Assume that, in the short run, there is no change in labor-supply behavior among the people in Perkopia In the year 2006, the poverty rate after the introduction of the welfare program in Perkopia is Again, suppose the government introduces a welfare program in which any individual with an income of less than $43,275 receives a lump-sum transfer payment of $7,000 from the government. Frances, a resident of Perkopia who currently earns an income of $42,474, has the opportunity to work overtime and earn an additional $1,500 this year. Which of the following statements are correct? Check all that apply. Frances would gain more income by turning down the overtime than she would if she accepted the overtime The $7,000 in aid creates a disincentive for Frances to earn more than $43,275 per year. Save &Continue Grade It Now Continue without saving
