If everyone in an economy had the exactly same level of income,where would the Lorenz curve for this economy locate?
A) 45 degree line.
B) L-shaped curve following the bottom and right sides of the Lorenz curve box.
C) L-shaped curve following the left and top sides of the Lorenz curve box.
D) a curve starts off with a lope lower than 1 then it becomes steeper.

Question

If everyone in an economy had the exactly same level of income,where would the Lorenz curve for this economy locate?
A) 45 degree line.
B) L-shaped curve following the bottom and right sides of the Lorenz curve box.
C) L-shaped curve following the left and top sides of the Lorenz curve box. 
D) a curve starts off with a lope lower than 1 then it becomes steeper.

Quizplus · Accepted Answer

When everyone has the exact same level of income, there is no income inequality in the economy. In such a case, the Lorenz curve coincides with the line of perfect equality, which is a 45-degree line connecting the origin to the top right corner. Therefore, option A) is the correct choice.

If Everyone in an Economy Had the Exactly Same Level