Answer to Question #249955 in Microeconomics for rudy

Question

Suppose in a country which can be divided into broadly two sections, a policy maker faces
trade-off as to how to allocate resources and has to choose from among the following policy
options.
(a) Policy A: (0, 250); Policy B (250, 0) ; Policy C (250, 350). Discuss and compare
all the policy choices that the policy maker is facing. Can you advocate any one of
these? Give reasons in support of your answer.
(b) Policy X (0, 500) ; Policy Y (500, 0) ; Policy Z (700, 0). Discuss and compare all the
policy choices that the policy maker is facing. Can you advocate any one of these?
Give reasons in support of your answer.
(c) If the policy maker is a utilitarian, then of all the six policy options stated in parts (i)
and (ii), what should have been the chosen policy? What would be the implications
of the chosen policy on egalitarianism? Explain your answer.

Answer 1

Solution:

a.). Policy A = The policymaker is facing redistributive policy as he prefers option 2 to 1.

Policy B = The policymaker is facing redistributive policy as he prefers options 1 to 2.

Policy C = The policymaker is facing a distributive policy, where he tries to balance between options 1 and 2.

I will advocate for Policy C since it is well balanced and less risky compared to Policy A and B.

 

b.). Policy X = The policymaker is facing redistributive policy as he prefers option 2 to 1.

Policy Y = The policymaker is facing redistributive policy as he prefers options 1 to 2.

Policy Z = The policymaker is facing a selective policy, where he prefers more of option 1.

 

I will advocate for either Policy X or Y since they require fewer resources are less risky compared to Policy Z.

 

c.). A utilitarian policymaker will choose Policy C and Policy Y since these are the most ethical choices.

An egalitarian policy choice will be one that advocates for equality. Therefore, an egalitarian policymaker would want to choose a policy that is equal to all. The resources distributed would be on a fifty-fifty basis.