Suppose that a nation has implemented a system for applying a tax rate of 2 percent to the incomes earned by the 10 percent of its residents with the highest incomes. All funds collected are then transferred directly to the 10 percent of the nation's residents with the lowest incomes.
a. What is the general effect on the shape of a Lorenz curve based on incomes prior to collection and redistribution of the tax?
b. What is the general effect on the shape of a Lorenz curve based on incomes after collection and redistribution of the tax?