Consider the town of Econville with a population of 5,000. There are 1,000 high school students, 1,000 undergraduate 1,000 graduate students, 1,000 economics professors, and 1,000 retired economists. Suppose that the total annual income in the economy is S 100 million: Each high school student earns $7,000 annually; each undergraduate earns $12,000 annually; each graduate student earns $20,000 annually; each professor earns $56,000 annually; and each retiree earns $5,000 annually. Suppose that the government sets the poverty line at an annual income of $16,000. The percentage of people with annual incomes below the poverty line in Econville is:

The percentage of people with annual incomes below the poverty line in Econville is 60%

Explanation:

The poverty line is the level of income below which the person earning is considered as Poor.

Poverty line = $16,000

All the people earning less than $16,000 are considered as the people with annual income below the poverty line.

People below poverty line = All the people eaning below $16,000 = High school student + undergraduates + retiree

People below poverty line = 1,000 + 1,000 + 1,000 = 3,000

Total Population = 5,000

Percentage of people with annual incomes below the poverty line in Econville = ( People having income below $16,000 / Total population ) x 100 = ( 3,000 / 5,000 ) x 100 = 60%

trade allows people to focus on one kind of production and trade for their other needs. ( d.)