Purchase Solution

Poverty Quantification- P2, Headcount Ratio, Poverty Gap

Not what you're looking for?

Ask Custom Question

7. Consider a 10 person economy. The poverty line is 1. In the first period the income distribution is: (.5,.5,.75,.75,1,1,1.5,1.5,2,2).

a. What is the level of poverty? Answer utilizing headcount ratio, [normalized] poverty gap, and P2 measures.

b. Suppose that in the next period one of the individuals making 1.5 now makes 1.75. What if any is the change in the level of poverty?

c. Go back to the original numbers. Now suppose that in the next period both of the individuals making .75 now make 1. What if any is the change in the level of poverty?

d. Go back to the original numbers. Now suppose that in the next period both of the individuals making .75 now make .625, and both of the individuals making .5 now also make .625. What if any is the change in the level of poverty?

Purchase this Solution
Solution Summary

Illustrates the use of poverty gap, headcount ratio, and P2 measures for the purposes of quantifying the poverty level. Several specific calculations are made to illustrate specific formula. References included.

Solution Preview

Please see the attached response for formatted equations and explanations. Thanks for using Brainmass, and I look forward to assisting you again in the future.

-Benjamin

7. Consider a 10 person economy. The poverty line is 1. In the first period the income distribution is:
(.5,.5,.75,.75,1,1,1.5,1.5,2,2).

a. What is the level of poverty? Answer utilizing headcount ratio, [normalized] poverty gap, and P2 measures.
- Headcount Ratio=
Where "n" is a population size where "q" people are poor, (World Bank, nd).
Since the population size is given as "10" and the poverty line is given as "1," the Headcount Ratio= 2:5
(There are four people with incomes less than "1," use this value for "q" in the preceding equation:
- Normalized poverty gap= Average Poverty Gap/Absolute Poverty Line (NPG= APG/Yp)
- Average Poverty Gap= Total Poverty Gap/Population (APG=TPG/N)
- Total Poverty ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Measures of poverty and income inequality.

    Another measure is the poverty gap index, which measures the percentage of people that are below the official poverty line as a percentage of the poverty line.

  • This post addresses the economics of reducing poverty.

    This leads to a situation where rising per capita income cannot alone suffice to reduce poverty because the gap between rich and poor must be stabilized back to include middle class to a greater degree first. 2.

  • Poverty and How it Affects the Achievement Gap

    poverty gap.

  • Equality of Opportunity

    There is a huge gap in-between certain groups. For instance, there is a huge gap between non-Hispanic white students when compared to Hispanic and African American students.

  • Poverty Facts and Stats

    The wealthiest nation on Earth has the widest gap because of Crony Capitalism wherein the original intent for capitalism, which was to be used as a vessel to raise citizens out of poverty, has been circumvented and used to enrich corporations and the

  • Statistics supporting combating poverty in your city.

    A review of academic journals can provide such information for you; but for this paper I believe your professor wanted you to try to go out and create your own ratio (not to mention, it was specific to a selected locality).

  • Cooking the Poverty Books

    The Foundation thinks the widening gap between rich and poor would evaporate with a change in calculations.

  • Aspects of Poverty in the U.S.

    reality that is poverty.

  • Poverty Trends in Canada

    The federal government regularly reports multi-billion dollar surpluses and Canada has the lowest debt-to-GDP (Gross Domestic Product) ratio of the 30 member countries of the Organization for Economic Cooperation and Development (OECD).

View More Related Solutions