Tuesday, July 24, 2012

Accumulative Line Graph or Lorenz Curve

The Lorenz curve is used an economics and is defined as graphical representation of the cumulative distribution function of the empirical probability distribution of wealth.  This means that it is a used to represent income distribution and therefore the inequality in wealth.  This graph is formed by plotting the cumulative distribution of the amount of the variable concerned against the cumulative frequency distribution of the individuals possessing the amount.  The Lorenz curve shown above illustrates the cumulative share of the income earned by people from lowest to highest incomes.

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