Homework Clinic

Social Science Clinic => Economics => Macroeconomics => Topic started by: curls713 on Nov 23, 2022

Title: The table shows the income share for each household quintile and the cumulative shares.Households ...
Post by: curls713 on Nov 23, 2022

Question 1

Income Inequality and Poverty Rates

The table shows the distribution of money income in Fakelandia.

Households	Money income (percentage)
Lowest 20 percent	4.9​
Second 20 percent	12.9​
Third 20 percent	16.9​
Fourth 20 percent	24.5​
Highest 20 percent	40.8​

What is the cumulative percentage of income earned by the bottom 80 percent of households?
◦ 24.5%
◦ 95.1%
◦ 59.2%
◦ 12.9%

Question 2

The table shows the income share for each household quintile and the cumulative shares.

Households (quintile)	Income (%)	Income (cumulative %)
First	8.4​	8.4​
Second	13.7​	​
Third	​	39.3​
Fourth	23.6​	​
Fifth	​	​

What is the income (%) for the third quintile? What is the income (cumulative %) for the fourth quintile?
◦ 25.6%, 62.9%
◦ 17.2%, 62.9%
◦ 17.2%, 40.8%
◦ 25.6%, 40.8%

Title: The table shows the income share for each household quintile and the cumulative shares.Households ...
Post by: studyforce.com on Nov 23, 2022

Answer 1

59.2%

The cumulative percentage is the sum of the current level and all previous levels.

Households	Money income (percentage)	Money income (cumulative percentage)
Lowest 20 percent	4.9​	4.9​

Second 20 percent

12.9​

4.9+12.9=17.8

Third 20 percent

16.9​

17.8+16.9=34.7

Fourth 20 percent

24.5​

34.7+24.5=59.2

Highest 20 percent

40.8​

59.2+40.8=100

Therefore, the bottom 80 percent of households (lowest 20 percent, second 20 percent, third 20 percent, and fourth 20 percent) has a cumulative percentage of income of 59.2%.

Answer 2

17.2%, 62.9%

The cumulative percentage is the sum of the current level and all previous levels.

Households (quintile)	Income (%)	Income (cumulative %)
First	8.4​	8.4​
Second	13.7​	8.4+13.7=22.1
Third	17.2​	22.1+17.2=39.3
Fourth	23.6​	39.3+23.6=62.9
Fifth	37.1​	62.9+37.1=100

Therefore, the income (%) for the third quintile is 17.2%.
The income (cumulative %) for the fourth quintile is 62.9%.