Correct Answer: Income inequality

Solution : The correct answer is (a) income inequality.

The Lorenz curve is a graphical representation that illustrates the distribution of income or wealth within a population. It compares the cumulative share of income or wealth held by different segments of the population with the corresponding cumulative share of the population.

The Lorenz curve is constructed by plotting the cumulative percentage of total income or wealth received by the population against the cumulative percentage of the population. The resulting curve provides insights into the degree of income or wealth inequality in a society.

If the Lorenz curve is closer to the perfect equality line (a straight diagonal line), it indicates a more equal distribution of income or wealth. On the other hand, if the Lorenz curve is further away from the perfect equality line, it suggests greater income or wealth inequality, with a smaller percentage of the population holding a larger share of income or wealth.