Problem: Consider a 10 person economy. The poverty line is 1. In the first period the income distribution is: (.5,.5,.75,.75,1,1,1.5,1.5,2,2).
Question 1: What is the level of poverty? Answer utilizing headcount ratio, [normalized] poverty gap, and P2 measures.
Question 2: Suppose that in the next period one of the individuals making 1.5 now makes 1.75. What if any is the change in the level of poverty?
Question 3: Go back to the original numbers. Now suppose that in the next period both of the individuals making .75 now make 1. What if any is the change in the level of poverty?
Question 4: Go back to the original numbers. Now suppose that in the next period both of the individuals making .75 now make .625, and both of the individuals making .5 now also make .625. What if any is the change in the level of poverty?