Please write down only the answers. Attachment screenshot is for your reference as well.

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 2007, the poverty line is set at an annual income of $27,400 for an individual.

Share of Total Income in Perkopia [Percent]

Year Lowest Quintile Second Quintile Middle Quintile Fourth Quintile Highest Quintile

2001 5.0 11.0 16.0 24.0 44.0

2007 3.8 9.9 15.2 22.5 48.6

2013 3.5 9.2 14.8 22.0 50.5

2019 3.2 8.2 14.0 21.5 53.1

The data in the table suggest that there was_______ [NO Change In (OR) NO Evidence Of (OR) An Increase In (OR) A Decrease In] income inequality from 2001 to 2019.

Complete the following table to help you determine the poverty rate in Perkopia in 2007. 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 $27,400.

Quintile Share of Income in 2007 (Percent) Total Income (Dollars) Individual Income (Dollars) Below Poverty Line?

Lowest 3.8 (Yes Or No)

Second 9.9 (Yes Or No)

Middle 15.2 (Yes Or No)

Fourth 22.5 (Yes Or No)

Highest 48.6 (Yes Or No)

Below Poverty Line has only two options (Yes Or No). Choose either of them as answer.

Using the information in this table, the poverty rate in Perkopia in 2007 is_______ [10% (OR) 20% (OR) 40% (OR) 50% (OR) 60%].

Suppose that the government introduces a welfare program in which any individual with an income of less than $27,400 per year receives a lump-sum transfer payment of $10,000 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 2007, the poverty rate after the introduction of the welfare program in Perkopia is_______ [10% (OR) 20% (OR) 40% (OR) 50% (OR) 60%].

Again, suppose the government introduces a welfare program in which any individual with an income of less than $27,400 receives a lump-sum transfer payment of $10,000 from the government. Caroline, a resident of Perkopia who currently earns an income of $26,942, has the opportunity to work overtime and earn an additional $1,100 this year.

Which of the following statements are correct? Check all that apply.

The $10,000 in aid presents a disincentive for Caroline to make more than $27,400 per year.

Caroline would gain more income by turning down the overtime than she would if she accepted the overtime.

Caroline may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.

Transcribed Image Text: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 2007, the poverty line is set at an annual income of $27,400 for an individual. Year 2001 2007 2013 2019 Lowest Quintile Second Quintile 5.0 3.8 Share of Total Income in Perkopia (Percent) 3.5 3.2 11.0 9.9 9.2 8.2 The data in the table suggest that there was Middle Quintile Fourth Quintile 16.0 15.2 14.8 14.0 no change in no evidence of 24.0 22.5 22.0 21.5 Highest Quintile 44.0 48.6 50.5 53.1 income inequality from 2001 to 2019. Complete the following table to help you determ an increase ine in Perkopia in 2007. To do this, begin by determining the total income of all individuals in each quintile using the fact that to in the economy is $500,000,000. Next, determine the income of an individual in a decrease in each quintile by dividing the total income of that mber 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 $27,400.
Transcribed Image Text:Quintile Lowest Second Middle Fourth Highest Share of Income in 2007 (Percent) 3.8 9.9 15.2 22.5 48.6 Total Income (Dollars) Individual Income (Dollars) Using the information in this table, the poverty rate in Perkopia in 2007 is Suppose that the government introduces a welfare program in which any individual with an income of less than $27,400 per year receives a lump-sum transfer payment of $10,000 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 2007, the poverty rate after the introduction of the welfare program in Perkopia is Below Poverty Line? Which of the following statements are correct? Check all that apply. 10% Again, suppose the government introduces a welfare program in which any individual with an of less than $27,400 receives a lump-sum transfer payment of $10,000 from the government. Caroline, a resident of Perkopia who currer 20% hs an income of $26,942, has the opportunity to work overtime and earn an additional $1,100 this year. 40% 50% The $10,000 in aid presents a disincentive for Caroline to make more than $27,400 p 60% Caroline would gain more income by turning down the overtime than she would if she accepted the overtime. Caroline may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.

Question

Please write down only the answers. Attachment screenshot is for your reference as well.

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 2007, the poverty line is set at an annual income of $27,400 for an individual.

	Share of Total	Income in	Perkopia	[Percent]
Year	Lowest Quintile	Second Quintile	Middle Quintile	Fourth Quintile	Highest Quintile
2001	5.0	11.0	16.0	24.0	44.0
2007	3.8	9.9	15.2	22.5	48.6
2013	3.5	9.2	14.8	22.0	50.5
2019	3.2	8.2	14.0	21.5	53.1

The data in the table suggest that there was_______ [NO Change In (OR) NO Evidence Of (OR) An Increase In (OR) A Decrease In] income inequality from 2001 to 2019.

Complete the following table to help you determine the poverty rate in Perkopia in 2007. 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 $27,400.

Quintile	Share of Income in 2007 (Percent)	Total Income (Dollars)	Individual Income (Dollars)	Below Poverty Line?
Lowest	3.8			(Yes Or No)
Second	9.9			(Yes Or No)
Middle	15.2			(Yes Or No)
Fourth	22.5			(Yes Or No)
Highest	48.6			(Yes Or No)

Below Poverty Line has only two options (Yes Or No). Choose either of them as answer.

Using the information in this table, the poverty rate in Perkopia in 2007 is_______ [10% (OR) 20% (OR) 40% (OR) 50% (OR) 60%].

Suppose that the government introduces a welfare program in which any individual with an income of less than $27,400 per year receives a lump-sum transfer payment of $10,000 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 2007, the poverty rate after the introduction of the welfare program in Perkopia is_______ [10% (OR) 20% (OR) 40% (OR) 50% (OR) 60%].

Again, suppose the government introduces a welfare program in which any individual with an income of less than $27,400 receives a lump-sum transfer payment of $10,000 from the government. Caroline, a resident of Perkopia who currently earns an income of $26,942, has the opportunity to work overtime and earn an additional $1,100 this year.

Which of the following statements are correct? Check all that apply.

The $10,000 in aid presents a disincentive for Caroline to make more than $27,400 per year.
Caroline would gain more income by turning down the overtime than she would if she accepted the overtime.
Caroline may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.

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 2007, the poverty line is
set at an annual income of $27,400 for an individual.
Year
2001
2007
2013
2019
Lowest Quintile Second Quintile
5.0
3.8
Share of Total Income in Perkopia
(Percent)
3.5
3.2
11.0
9.9
9.2
8.2
The data in the table suggest that there was
Middle Quintile Fourth Quintile
16.0
15.2
14.8
14.0
no change in
no evidence of
24.0
22.5
22.0
21.5
Highest Quintile
44.0
48.6
50.5
53.1
income inequality from 2001 to 2019.
Complete the following table to help you determ an increase ine in Perkopia in 2007. To do this, begin by determining the total income of all
individuals in each quintile using the fact that to
in the economy is $500,000,000. Next, determine the income of an individual in
a decrease in
each quintile by dividing the total income of that
mber 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 $27,400.

Quintile
Lowest
Second
Middle
Fourth
Highest
Share of Income in 2007
(Percent)
3.8
9.9
15.2
22.5
48.6
Total Income
(Dollars)
Individual Income
(Dollars)
Using the information in this table, the poverty rate in Perkopia in 2007 is
Suppose that the government introduces a welfare program in which any individual with an income of less than $27,400 per year receives a
lump-sum transfer payment of $10,000 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 2007, the poverty rate after the introduction of the welfare program in Perkopia is
Below Poverty Line?
Which of the following statements are correct? Check all that apply.
10%
Again, suppose the government introduces a welfare program in which any individual with an
of less than $27,400 receives a lump-sum
transfer payment of $10,000 from the government. Caroline, a resident of Perkopia who currer 20% hs an income of $26,942, has the
opportunity to work overtime and earn an additional $1,100 this year.
40%
50%
The $10,000 in aid presents a disincentive for Caroline to make more than $27,400 p
60%
Caroline would gain more income by turning down the overtime than she would if she accepted the overtime.
Caroline may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.

Accepted Answer

The poverty line is the line defined by the government of the nation, under which an individual is…