Definition

• Lorenz curve is the graphical representation of the distribution of wealth or income within a population

• Lorenz curve was especially graphed to calculate the distribution of inequality

Lorenz Curve Representation

• The Lorenz curve is represented by the curve in the line while equality of distribution is represented by the straight line

• The Y-axis represents the percentage of income

• The X-axis represent the percentage of people

Gini-Coefficient

• The Gini Coefficient measures income or wealth inequality based on the Lorenz Curve.

• Formula of Gini-coefficient = A / A + B

• A = area between line of equality and Lorenz curve

• B = Area under Lorenz curve

Price Equality and inequality

• Perfect equality talks about the income between everyone is equal and fair

• Perfect inequality is when one person has all the income

• PE -: 0

• PIE -: 1