Economics • Economic BasicsMedium
What does a Gini coefficient of zero explicitly indicate regarding income distribution within a population?
A. Absolute inequality where one person holds all income
B. Perfect equality where every individual receives the same income✓ Correct Answer
C. Moderate inequality typical of developing industrial economies
D. Total absence of market transactions and monetary exchange
💡 Solution & Explanation
The Gini coefficient is a statistical measure of economic dispersion representing income or wealth inequality within a nation. A Gini coefficient of zero expresses perfect equality, where all individuals possess identical income shares. A coefficient of one represents absolute inequality, where a single individual earns the entire national income. The Lorenz curve graphically illustrates this distribution, with the Gini coefficient derived from the area between the line of perfect equality and the observed Lorenz curve.
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