Consider 2 distributions of consumption for 4 persons. Poverty line = 3.01
- A distribution is (1,2,3,4)
- B distribution is (2,2,2,4)
a. headcount index is 0.75 (H/N = ¾ = 0.75) and the poverty gap index is 0.25 in both cases.
b. headcount index is 0.75 (H/N = 1/2 = 0.50) and the poverty gap index is 0.25 in both cases.
c. headcount index is 0.75 (H/N = ¾ = 0.75) and the poverty gap index is 0.25 for A and (H/N = 0.50) and the poverty gap index is 0.50 for B.
d. None of the above
Answer: A