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Any poverty line will be somewhat arbitrary, and it is useful to have a poverty line whose basic definition does not change much over time. If Congress voted every few years to redefine what poverty means, then it would be difficult to compare rates over time. After all, would a lower poverty rate mean that the definition had been changed, or that people were actually better off? Government statisticians at the U.S. Census Bureau have ongoing research programs to address questions like these.

Key concepts and summary

Wages are influenced by supply and demand in labor markets, which can lead to very low incomes for some people and very high incomes for others. Poverty and income inequality are not the same thing. Poverty applies to the condition of people who cannot afford the necessities of life. Income inequality refers to the disparity between those with higher and lower incomes. The poverty rate is what percentage of the population lives below the poverty line, which is determined by the amount of income that it takes to purchase the necessities of life. Choosing a poverty line will always be somewhat controversial.

Problems

In country A, the population is 300 million and 50 million people are living below the poverty line. What is the poverty rate?

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In country B, the population is 900 million and 100 million people are living below the poverty line. What is the poverty rate?

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References

Ebeling, Ashlea. 2014. “IRS Announces 2015 Estate And Gift Tax Limits.” Forbes. Accessed March 16, 2015. http://www.forbes.com/sites/ashleaebeling/2014/10/30/irs-announces-2015-estate-and-gift-tax-limits/.

Federal Register: The Daily Journal of the United States Government. “State Median Income Estimates for a Four-Person Household: Notice of the Federal Fiscal Year (FFY) 2013 State Median Income Estimates for Use Under the Low Income Home Energy Assistance Program (LIHEAP).” Last modified March 15, 2012. https://www.federalregister.gov/articles/2012/03/15/2012-6220/state-median-income-estimates-for-a-four-person-household-notice-of-the-federal-fiscal-year-ffy-2013#t-1.

Luhby, Tami. 2014. “Income is on the rise . . . finally!” Accessed April 10, 2015. http://money.cnn.com/2014/08/20/news/economy/median-income/.

Meyer, Ali. 2015. “56,023,000: Record Number of Women Not in Labor Force.” CNSNews.com. Accessed March 16, 2015. http://cnsnews.com/news/article/ali-meyer/56023000-record-number-women-not-labor-force.

Orshansky, Mollie. “Children of the Poor.” Social Security Bulletin . 26 no. 7 (1963): 3–13. http://www.ssa.gov/policy/docs/ssb/v26n7/v26n7p3.pdf.

The World Bank. “Data: Poverty Headcount Ratio at $1.25 a Day (PPP) (% of Population).” http://data.worldbank.org/indicator/SI.POV.DDAY.

U.S. Department of Commerce: United States Census Bureau. “American FactFinder.” http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml.

U.S. Department of Commerce: United States Census Bureau. “Current Population Survey (CPS): CPS Table Creator.” http://www.census.gov/cps/data/cpstablecreator.html.

U.S. Department of Commerce: United States Census Bureau. “Income: Table F-6. Regions—Families (All Races) by Median and Mean Income.” http://www.census.gov/hhes/www/income/data/historical/families/.

U.S. Department of Commerce: United States Census Bureau. “Poverty: Poverty Thresholds.” Last modified 2012. http://www.census.gov/hhes/www/poverty/data/threshld/.

U.S. Department of Health&Human Services. 2015. “2015 Poverty Guidelines.” Accessed April 10, 2015. http://www.medicaid.gov/medicaid-chip-program-information/by-topics/eligibility/downloads/2015-federal-poverty-level-charts.pdf.

U.S. Department of Health&Human Services. 2015. “Information on Poverty and Income Statistics: A Summary of 2014 Current Population Survey Data.” Accessed April 13, 2015. http://aspe.hhs.gov/hsp/14/povertyandincomeest/ib_poverty2014.pdf.

Questions & Answers

what is economic
Vida Reply
Economic is a seines which study the human behavior as ends and scarce means which have alternative uses
Debrah
Economics is the study of how human make decisions in the face of scarcity. These can be individual decisions, family decisions, business decisions or societal decisions.
Wandji
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Emmanuel Reply
what is demand
Joseph Reply
Demand simply refers to the amount of goods and services which the consumer is willing and able to purchase at each price
Owusu
what is mean by unitary elastic demand
Bangniyel Reply
demand is said to be unitary elastic when the percentage change in the demand is equal to the percentage change in the price
George
what is the principle of equi-marginal utility
Reliance Reply
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Anita
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Anita Reply
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Anita
economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses
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I don't know.
natchanan
u don't
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Raewyn
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ya nyc
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Anita
what is production
Anita
production is creation of goods and services
George
what is macroeconomics and microeconomics
Anita
macroeconomics deals with larger economic units such as GDP,GNP,employment while microeconomics deals with smaller economic units such firm and household
George
Thanks
Anita
Explain the ff Scarcity Ends Demand Supply Choice Scale of preference
Anita
macroeconomics deals with larger economic units such as GDP,GNP,employment while microeconomics deals with smaller economic units such firm and household
George
Gross Domestic product...it represent the total value of the products produced within the country including foreign industries
George Reply
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Anita
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Odia Reply
list of climate that affect demands
Odia
What is two major forms of international trade?
Musa Reply
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Abdul Reply
De ans,Economics is the study of women behavior as a relationship between end and scared mean which have alternative uses.
Anita
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Abdul Reply
More money = more consumers, more consumers = lessen the product, less product = high price, high price = inflation
TuroN
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Odia
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Otuu Reply
condition under which price and quantity will be increased at the same time
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factors that hinders mobility of labour
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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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