6.5

Income Inequality and the Lorenz Curve

AP Microeconomics

Measuring Income Inequality

Income Distribution

The Lorenz Curve

Area A123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899100101102103104105123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899100101102103104105Cumulative % of PopulationCumulative % of IncomePerfect EqualityLorenz Curve

The further the Lorenz Curve bows from the 45° line, the greater the inequality

Reading the Lorenz Curve

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The Gini Coefficient

Sources of Income Inequality

Comparing Income Distributions

Functional Income Distribution

AP Exam Tips

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Common Mistakes

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Unit 6 topics

Unit 6 overview6.1Socially Efficient and Inefficient Market Outcomes6.2Externalities6.3Public and Private Goods6.4The Effects of Government Intervention in Markets6.5Income Inequality and the Lorenz Curve6.6Tax Policy and Income Distribution6.7Market Failure and Government Failure
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