5 1. Income inequality and the poverty rateThe following table summarizes the income distribution for the town of Perkopia, which has a population of 10,000 people. Every individual within anIncome group earns the same income, and the total annual income in the economy is $500,000,000. Suppose that in 2019, the poverty line is set atan annual income of $40,700 for an individual.Share of Total Income in Perkopia(Percent)YearLowest QuintileSecond Quintile Middle Quintile Fourth Quintile Highest Quintile20015.011.016.024.044.020073.89.715.222.848.520133.39.014.722.450.620193.28.214.021.653.0The data in the table suggest that there was an increase inincome inequality from 2001 to 2019.an increase inno evidence ofa decrease inComplete the following table to help you detey rate in Perkopla in 2019. To do this, begin by determining the total income of allme in the economy is $500,000,000. Next, determine the income of an individual inindividuals in each quintile using the fact thano change ine number of people in that quintile. (Hint: Recall that Perkopia has a population ofeach quintile by dividing the total income of i10,000 people.) Finally, determine whether the individual income for each quintile fails below the poverty line of $40,700Total Income(Dollars)Share of Income in 2019(Percent)Individual Income(Dollars)Below Poverty Line?10,000 people.) Finally, determine whether the individual income for each quintile fails below the poverty line of $40,700.Share of Income in 2019(Percent)Total Income(Dollars)QuintileIndividual Income(Dollars)Below Poverty Line?Lowest3.2Second8.2Middle14.0Fourth21.6Highest53.0Using the information in this table, the poverty rate in Perkopia in 2019 is10%Suppose that the government introduces a welfare program in which any iwith an income of less than $40,700 per year receives a lump-sumtransfer payment of $2,000 from the government. Assume that, in the sho 20% there is no change in labor-supply behavior among the people inPerkopia.40%In the year 2019, the poverty rate after the introduction of the welfare pro 50% Perkopia is60%Jual with an income of less than $40,700 receives a lump-sumAgain, suppose the government introduces a welfare program in which antransfer payment of $2,000 from the government. Megan, a resident of Perkopia who currently earns an income of $40,406, has the opportunity towork overtime and earn an additional $1,100 this year.Which of the following statements are correct? Check all that apply.Megan would gain more income by turning down the overtime than she would if she accepted the overtime.Megan may accept the overtime if she feels that taking it will increase the chances of her receiving a significant promotion.The $2,000 in aid presents a disincentive for Megan to make more than $40,700 per year.PPP

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Income inequality measures the difference in the distribution of income among different…