Pearson Edexcel A Level · Economics B (9EB0)

3.6.1 Poverty and inequality: Practice Questions

3 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on 3.6.1 Poverty and inequality.

8 questions22 marksFree, no account

Question 1

1 mark

Which of the following is a common measure of relative poverty in developed nations such as the UK?

Question 2

1 mark

If a country experiences a shift in its Lorenz curve towards the \( 45^\circ \) line of perfect equality, what does this indicate about the income distribution and the Gini coefficient?

Question 3

1 mark

Which of the following best defines absolute poverty according to international measures?

Question 4

2 marks

Explain the primary difference between absolute poverty and relative poverty.

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Question 5

4 marks

Define the term poverty trap and explain how the interaction between taxation and the withdrawal of state benefits can create a disincentive for low-income earners to work more hours.

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Question 6

5 marks

Analyze how high levels of income inequality can negatively impact a firm's long-term productivity by creating a cycle of low human capital development among the workforce.

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Question 7

3 marks

(a) Distinguish between income and wealth as measures of economic inequality.
(b) Explain one reason why wealth is often distributed more unequally than income within a developed economy.

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Question 8

5 marks

Consider a Lorenz curve diagram where the cumulative percentage of households is plotted on the horizontal axis and the cumulative percentage of income is plotted on the vertical axis.
(a) Describe the relationship between the Lorenz curve and the line of perfect equality.
(b) If the area between the line of perfect equality and the Lorenz curve is represented by \( A \), and the area beneath the Lorenz curve is represented by \( B \), state the formula for the Gini coefficient and explain what a coefficient of \( 0 \) would represent.

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