In the context of income distribution, which analysis is represented by the Lorenz curve?

The Lorenz curve is a graphical representation used to illustrate income or wealth distribution within a particular population. It effectively visualizes the degree of inequality in income distribution by plotting the cumulative percentage of total income received by cumulative percentages of the population, usually from the poorest to the richest.

When the Lorenz curve deviates from the line of perfect equality (where each percentage of the population earns the same percentage of total income), it indicates the extent of income inequality. A steeper curve compared to the line of equality signifies a higher level of income inequality, while a curve that closely follows the line of equality suggests more equal income distribution.

In summary, the Lorenz curve is specifically used to analyze and depict income inequality, making it a crucial tool in understanding how resources are distributed across a society.