Based on the Lorenz curve comparison, which statement is true?

Based on the Lorenz curve comparison, which statement is true?

• A. Country X has higher average income than Country Z
• B. Income is more equally distributed in Country X than in Country Z
• C. Country Z has a more equal distribution than Country X
• D. Lorenz curves cannot indicate inequality

Answer: (B)

Lorenz curves show how income is distributed across the population: the closer a curve sits to the line of equality, the more equal the distribution. If Country X’s curve is nearer to that line than Country Z’s, X has a more equal income distribution. That makes the statement about X being more equal true. Remember, the Lorenz curve reveals distribution, not average income levels, so it doesn’t tell which country has higher overall income. It also shows inequality directly, so saying curves cannot indicate inequality is inaccurate. If Z’s curve bows further from the line, it means Z is less equal, not more.

Lorenz curves show how income is distributed across the population: the closer a curve sits to the line of equality, the more equal the distribution. If Country X’s curve is nearer to that line than Country Z’s, X has a more equal income distribution. That makes the statement about X being more equal true.

Remember, the Lorenz curve reveals distribution, not average income levels, so it doesn’t tell which country has higher overall income. It also shows inequality directly, so saying curves cannot indicate inequality is inaccurate. If Z’s curve bows further from the line, it means Z is less equal, not more.