Economics 9708 · AS & A Level · Short-run costs

Short-run costs — practice question

The Lorenz curves shown in the diagram illustrate different distributions of income and wealth. Initially, income in a country is distributed more evenly than wealth. Over a period, the income distribution becomes less equal, while the wealth distribution becomes more equal. Which movement would represent the effects of these changes on the country's distribution of income and wealth?

  • Adistribution of income: shift from curve 1 to curve 2 / distribution of wealth: shift from curve 4 to curve 3
  • Bdistribution of income: shift from curve 2 to curve 1 / distribution of wealth: shift from curve 3 to curve 4
  • Cdistribution of income: shift from curve 3 to curve 4 / distribution of wealth: shift from curve 2 to curve 1
  • Ddistribution of income: shift from curve 4 to curve 3 / distribution of wealth: shift from curve 1 to curve 2

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