2 The Lorenz curve measures inequality in person income dist

2. The Lorenz curve measures inequality in person income distribution. What is the difference between personal income distribution and functional income distribution?

Solution

Personal income distribution shows differences in income of citizens among a nation. On the otherhand, functional income distribution may occur due to difference in factor rewards to production, viz. wages, rent, interest and profits. The former one belongs to the discussion of labour market and the later one is determined in input/factor market that ultimately show factor rewards.