Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 20, Problem 3QCMC
To determine
The point where utilitarian believes that the redistribution is worth.
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A utilitarian believes that the redistribution ofincome from the rich to the poor is worthwhile aslong asa. the worst-off members of society benefit from it.b. those contributing to the system are in favor of it.c. each person’s income, after taxes and transfers,reflects his marginal product.d. the distortionary effect on work incentives is nottoo large.
What is the main goal of redistribution policies in welfare economics? A. To increase government revenue B. To reduce
income inequality C. To maximize consumer surplus D. To minimize deadweight loss
Is work on the part of welfare recipients a
reasonable expectation? Does
government have any business getting
involved in the personal lives of welfare
recipients?
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- Back to Assignment Attempts 0.8 Keep the Highest 0.8/41 4. Redistributive philosophies and incentives Consider a society consisting of two people. Kevin earns an income of $115,000 per year and Maria earns an income of $40,000 per year. The government is considering a redistribution plan that would impose a 15% tax on Kevin's income and give the revenue to Maria. Without any incentive distortion, Kevin would retain $97,750 and Maria would end up with $57,250. However, let us assume that since Kevin will not receive all the income he earns, he decides to work less and earn an income of only $95,000, of which 15% x $95,000 $14,250 will be owed in taxes. With the redistribution plan, Kevin will take home an income of s The $14,250 that Kevin pays in taxes will be transferred by the government to Maria. Let us assume that since Maria now receives payment from the government, she will not work as many hours and will earn an income from work of only $35,000 instead of her initial $40,000.…arrow_forwarda. Describe the basic self-selection issue involved whenever discussing the returns to education. b. Does the fact that some high school or college dropouts go on to earn vast amounts of money (e.g., Bill Gates dropped out of Harvard without ever graduating) contradict the self-selection story? c. Most government-provided job training programs are optional to the worker. Describe how the self-selection issue might be used to call into question empirical results suggesting there are large economic benefits to be gained by requiring all workers to receive government-provided job training.arrow_forwardThe income threshold used by the organization International Poverty Line for extreme poverty a. Is a guideline for policy makers and not an exact “tipping point” at which point a person falls into extreme poverty. b. Is adjusted for price differences across countries. c. Is one of several thresholds sometimes used to discuss poverty that show that the percentage of people living in poverty has been declining in recent decades. d. Is agreed on by all organizations working on poverty. e. All of the above except d.arrow_forward
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