1. What is the Lorenz curve? Draw and expalin all parts. What are the criticisms of the curve?

2. Some economists argue that the official poverty figures overstate poverty in this country. Why?

3.Suppose a family purchases 10,000 gallons of water a year at 20 cents a gallon and one diamond ring at a price of $1,000. Can we conclude that the diamond ring provides more utility to the family than water? Explain.