Suppose that you have the following information from Nigeria. The lowest 20% of the income distribution receives a 1.0% share of overall income. The next quintile gets 2.5%, the third one receives 8.5%, the fourth quintile has 20% and finally, the highest quintile receives 68% of overall income.

(a) Graph the Lorenz curve from the Nigerian data given above, carefully labeling the axes. On the axes, label all values that correspond to the five points that make up the Lorenz curve.

(b) Calculate the Gini coefficient.

(c) If we transfer 0.5% of income from the second quintile to the third (so that they become 2.0% and 9% respectively), what is the revised value of the Gini index? Do we have more or less inequality now?

(d) Go back to part b and now transfer 0.5% from the second quintile to the first quintile so that they become 2.0% and 1.5% respectively. What is the revised value of the Gini index? Do we have more or less inequality now? Also, compare this against the transfer that happened in part c and interpret the difference.