Asked by Zachary Smith on Jul 23, 2024
Verified
Suppose a policy change will generate $180,000 of benefits for low-income families and $150,000 of costs for high-income and middle-class families. This change can best be described as
A) inefficient.
B) Pareto efficient.
C) potentially efficient.
D) equitable.
Policy Change
Modifications or alterations made to existing rules, laws, or regulations.
Low-Income Families
Households earning significantly below the median income of a geographical area, often facing financial stress.
Equitable
Fair or impartial treatment, especially in the context of the distribution of wealth or opportunities.
- Investigate the scenarios in which a policy or action could be seen as efficient in a potential sense.
- Explore the impact of market dynamics and policy changes on welfare and equity.
Verified Answer
SP
Sunita PangeniJul 27, 2024
Final Answer :
C
Explanation :
This change is potentially efficient because the total benefits exceed the total costs, suggesting that those who benefit could theoretically compensate those who are harmed and still be better off, aligning with the concept of potential Pareto efficiency. However, whether it is equitable depends on value judgments about the distribution of costs and benefits across different income groups.
Learning Objectives
- Investigate the scenarios in which a policy or action could be seen as efficient in a potential sense.
- Explore the impact of market dynamics and policy changes on welfare and equity.