In a simplified economy, 90% of the population are workers who receive their income from wages, and the remaining 10% are owners who receive their income from profits. If the total share of the economy's output paid to owners as profits is 30%, then the second kink on this economy's Lorenz curve would be located at the coordinates (90, 30).
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Income Distribution in a Two-Class Economy
In an economy where the population is divided into workers and owners, the workers comprise 80% of the population. The share of total income going to owners as profits is 50%. On a Lorenz curve for this economy, what are the coordinates (cumulative % of population, cumulative % of income) of the kink that separates the worker class from the owner class?
Calculating Lorenz Curve Coordinates for a Two-Class Economy
In a simplified economy, 90% of the population are workers who receive their income from wages, and the remaining 10% are owners who receive their income from profits. If the total share of the economy's output paid to owners as profits is 30%, then the second kink on this economy's Lorenz curve would be located at the coordinates (90, 30).