Question
Could you explain how to solve this problem? The gure below shows Lorenz curves of a developing country before and after opening for international trade
Could you explain how to solve this problem?
The gure below shows Lorenz curves of a developing country before and after opening for international trade (the solid and dashed lines, respectively). Prior to international trade there are 70 workers who receive a total of 70 % of the economy's income. Of these 70 workers, 15 have 'high'-skills, while 55 workers are low-skilled; before trade these worker groups earn respectively 50 % and 20% of country's total income. There are 5 business owners who earn 30 % of the economy's income and 25 unemployed persons initially. 'High'-skilled workers use a certain technology that is not as advanced as the one used in the foreign developed country, while the low-skilled workers use primitive tools but are capable of producing products that are highly demanded in the foreign developed country. The total income of the economy increases by 10 % due to opening for international trade. Other changes happening after opening for trade are marked by dashed lines in the graph below.
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