Lorenz curve
Definition. A Lorenz curve is a graph that shows the distribution of income in an economy by plotting the cumulative percentage of total income earned against the cumulative percentage of the population, ranked from poorest to richest. It is used to illustrate the degree of income inequality.
The curve always lies below the line of equality, bowing further from it as inequality rises. The ratio of the area between the curve and the line to the total area gives the Gini coefficient.
This term belongs to The Gini Coefficient in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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