Economics • Economic BasicsMedium
What does the 'Gini Coefficient' measure in welfare economics?
A. The rate of technological innovation across industrial sectors.
B. The degree of income or wealth inequality within a population.✓ Correct Answer
C. The elasticity of substitution between capital and labor.
D. The degree of monopoly power in a given industry.
💡 Solution & Explanation
The Gini coefficient measures the inequality of income or wealth distribution among residents of a country, scaled between zero and one. A value of zero represents complete equality, whereas a value of one indicates maximal inequality where one person holds all resources. Other economic phenomena like market monopoly power are measured using indices such as the Lerner index or Herfindahl-Hirschman index.
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