Answer to Question #110017 in Microeconomics for Kerthy

Question

One tradeoff society faces is between efficiency and equality. Define each term if t u.s. government redistributes income from the rich to the poor , explain how this action affects equality as well as efficiency in the economy.

Answer 1

Efficiency is the ability of a society to maximize the use of scarce resources. Based on the concept, improving the welfare of one group hurts the other group. On the other hand, equality is the ability to distribute economic resources fairly in an economy. If the US government redistributes income from the rich to the poor, it achieves equality among all citizens. By redistributing income from the rich to the poor, the US government disrupts economic efficiency.