Using the figure below, calculate the gain from redistributing $25,000 from those earning $100,000 to those earning $50,000. Why do you think that this gain in well-being is smaller than the redistribution in the example in the chapter, which is redistributed from someone earning $200,000 to someone earning $20,000? What are some potential problems with this redistribution plan?
Using the figure below, calculate the gain from redistributing $25,000 from those earning $100,000 to those earning $50,000. Why do you think that this gain in well-being is smaller than the redistribution in the example in the chapter, which is redistributed from someone earning $200,000 to someone earning $20,000? What are some potential problems with this redistribution plan?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Using the figure below, calculate the gain from redistributing $25,000 from those earning $100,000 to those earning $50,000. Why do you think that this gain in well-being is smaller than the redistribution in the example in the chapter, which is redistributed from someone earning $200,000 to someone earning $20,000? What are some potential problems with this redistribution plan?

Transcribed Image Text:10. Using the figure below, calculate the gain from redistributing $25,000 from those
earning $100,000 to those earning $50,000. Why do you think that this gain in
well-being is smaller than the redistribution in the example in the chapter, which
redistributed from someone earning $200,000 to someone earning $20,000? What
are some potential problems with this redistribution plan?
Satisfaction
(0-10 scale)
7.2
7.0
6.7
Well-being
curve
0
$50,000 $75,000 $100,000 Annual income
Stevenson/Wolfers, Principles of Economics, 1e, © 2020 Worth Publishers
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