Reading 14: Efficiency and Equity- LOS f ～ Q1-5

答案和详解如下：

1.A candidate for public office has proposed a program of wealth transfers based on the principles of utilitarianism. In support of her proposal, she makes the following statements:

Statement 1: “Increasing taxes on high income earners will cause them to work more hours to maintain their after-tax income, resulting in greater economic output.”

Statement 2: “The government will need to hire people to manage and administer the wealth transfers. These new jobs will further expand economic output.”

Are these statements correct or incorrect?

A)           Incorrect                     Correct

B)           Correct                       Incorrect

C)           Correct                       Correct

D)           Incorrect                     Incorrect

The correct answer was D)

Both statements are incorrect. Increasing taxes on high income earners reduces their incentive to work, which results in less labor being supplied and lower economic output. The labor needed to administer wealth transfers must be diverted from other uses that provide value to consumers. This moves resources away from a productive use, which reduces economic output.

2.Which of the following most accurately reflects the concept that competitive markets allocate resources fairly as long as the same rules apply to all participants?

A)   Utilitarianism.

B)   The symmetry principle.

C)   The fairness principle.

D)   The equality of outcomes principle.

The correct answer was B)

The symmetry principle holds that people in similar situations should be treated similarly. It implies that the market allocates resources fairly if the rules of economic allocation are fair.

3.Which of the following economic schools of thought suggests that the greatest good occurs to the greatest number of people when wealth is transferred from the rich to the poor?

A)   Symmetry.

B)   Utilitarianism.

C)   Utopianism.

D)   The Big Tradeoff.

The correct answer was B)

Utilitarianism refers to the idea that the greatest good occurs to the greatest number of people when wealth is transferred from the rich to the poor in order to make everyone’s wealth equal.

4.The symmetry principle refers to the idea that if an economy is organized under a fair set of rules:

A)   the greatest good is achieved for the greatest number of people.

B)   the wealth that individuals accumulate will become equal over time.

C)   individuals receive goods and services equal in value to their economic contribution.

D)   output is maximized at the optimal balance between voluntary and involuntary contributions from individuals.

The correct answer was C)

The symmetry principle asserts that under a fair set of rules, the goods and services that individuals receive from the economy will be equal in value to the contributions they make to the economy.

5.Which of the following is least likely to be considered a drawback of utilitarianism?

A)   Wealth transfer from the rich to the poor is expensive.

B)   High income earners will work more.

C)   Cost of tax administration associated with wealth transfers.

D)   Administrative fees associated with wealth transfers.

The correct answer was B)

The biggest problem with the utilitarian concept is that the wealth transfer from high income earners to low income earners is brought about by taxing the high income earners. This will cause the high income earners to work less.