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VICEconomicsQuick questions
Unit 3: Australia's economic prosperity
Quick questions on Equity in the distribution of income (VCE Economics Unit 3)
7short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is equity defined?Show answer
Equity in the distribution of income means a fair distribution of income across the population. It is widely treated as a domestic economic objective because a fair distribution supports social cohesion, gives everyone access to a reasonable standard of living, and allows participation in the economy.
What is the equity-efficiency relationship?Show answer
There is often a trade-off between equity and efficiency.
What is the Lorenz curve?Show answer
A diagram that plots the cumulative share of income (vertical axis) against the cumulative share of households, ranked from poorest to richest (horizontal axis).
What is the Gini coefficient?Show answer
A single summary number derived from the Lorenz curve. It equals the ratio of the area between the line of equality and the Lorenz curve to the total area under the line of equality.
What is q1?Show answer
Distinguish between equity and equality in the distribution of income. [2 marks]
What is q2?Show answer
Explain how the Lorenz curve and the Gini coefficient are used to measure income inequality. [4 marks]
What is q3?Show answer
Explain the trade-off between equity and efficiency that can arise from redistributing income. [4 marks]
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