FIGURE 1 LORENZ CURVES (TWO-PERSON ECONOMY)
imageIf both people in this two-person economy earn 50% of the total income, income will be distributed perfectly equally, shown by the equal distribution curve 0ac. Curve 0bc represents the same economy in which the low-income person earns 25% of the total income and the upper-income person earns 75%. This curve is skewed to the right, indicating an unequal distribution. The most extreme distribution between these two individuals (0% and 100%) is represented by the Lorenz curve 0dc.