Asked by Desirea Moore on May 05, 2024
Verified
There is a trade-off between equity and efficiency in that policies designed to promote equity often come at the cost of decreased efficiency.
Equity
Fairness or justice in the way people are treated, or in financial terms, the value of an ownership interest in property, including shareholders' equity in a business.
Efficiency
The optimal allocation of resources to maximize the production of goods and services.
- Identify the correlation between efficiency and equity, acknowledging the compromises entailed.
Verified Answer
LL
Lalith LankaMay 06, 2024
Final Answer :
True
Explanation :
Policies like progressive taxation, minimum wage laws, and social welfare programs may promote equity by redistributing wealth and resources to disadvantaged individuals, but they can also decrease economic efficiency by creating disincentives to work or invest. Therefore, there is a trade-off between equity and efficiency in the design of economic policies.
Learning Objectives
- Identify the correlation between efficiency and equity, acknowledging the compromises entailed.
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