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2. The Lorenz curve measures inequality in person income distribution. What is the difference
between personal income distribution and functional income distribution?
Solution
Personal income distribution shows differences in income of citizens among a nation. On the
otherhand, functional income distribution may occur due to difference in factor rewards to
production, viz. wages, rent, interest and profits. The former one belongs to the discussion of
labour market and the later one is determined in input/factor market that ultimately show factor
rewards.

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2. The Lorenz curve measures inequality in person income distributio.pdf

  • 1. 2. The Lorenz curve measures inequality in person income distribution. What is the difference between personal income distribution and functional income distribution? Solution Personal income distribution shows differences in income of citizens among a nation. On the otherhand, functional income distribution may occur due to difference in factor rewards to production, viz. wages, rent, interest and profits. The former one belongs to the discussion of labour market and the later one is determined in input/factor market that ultimately show factor rewards.