Income Brackets The following diagram shows the movement of

Last updated: 6/15/2023

Income Brackets The following diagram shows the movement of households in a certain country among three income groups affluent middle class and poor over the 11 year period 1980 1991 72 000 in 1994 dollars 24 000 in 1994 dollars AFFLUENT 27 9 MIDDLE CLASS 30 8 POOR 7 3 8 i a Use the transitions shown in the diagram to construct a transition matrix assuming zero probabilities for the transitions between affluent and poor Let 1 affluent 2 middle class and 3 poor 0 721 0 279 0 0 847 0 08 0 073 0 0 308 0 692 b Assuming that the trend shown was to continue what percent of households classified as affluent in 1980 were predicted to become poor in 2002 Give your answer to the nearest 0 1 22 3 04 c According to the model what percentage of all households will be in each income bracket in the long term Give your answer to the nearest 0 1 affluent 172