Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 20, Problem 6PA
Subpart (a):
To determine
The different views for the redistribution of income.
Subpart (b):
To determine
The different views for the redistribution of income.
Subpart (c):
To determine
The different views for the redistribution of income.
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Suppose there are two possible income distributionsin a society of ten people. In the first distribution,nine people have incomes of $60,000 and one personhas an income of $20,000. In the second distribution,all ten people have incomes of $50,000.a. If the society had the first income distribution,what would be the utilitarian argument forredistributing income?b. Which income distribution would Rawls considermore equitable? Explain.c. Which income distribution would Nozick considermore equitable? Explain.
Consider a society consisting of two people. Edison earns an income of $85,000 per year and Hilary earns an income of $25,000 per year. The government is considering a redistribution plan that would impose a 25% tax on Edison's income and give the revenue to Hilary.
Without any incentive distortion, Edison would retain $63,750 and Hilary would end up with $46,250. However, let us assume that since Edison will not receive all the income he earns, he decides to work less and earn an income of only $75,000, of which 25%×$75,000=$18,75025%×$75,000=$18,750 will be owed in taxes.
With the redistribution plan, Edison will take home an income of_________.
.
The $18,750 that Edison pays in taxes will be transferred by the government to Hilary. Let us assume that since Hilary now receives payment from the government, she will not work as many hours and will earn an income from work of only $24,000 instead of her initial $25,000.
With the redistribution plan, Hilary's total…
Consider a society consisting of two people. Jake earns an income of $100,000 per year and Latasha earns an income of $25,000 per year. The
government is considering a redistribution plan that would impose a 20% tax on Jake's income and give the revenue to Latasha.
Without any incentive distortion, Jake would retain $80,000 and Latasha would end up with $45,000. However, let us assume that since Jake will not
receive all the income he earns, he decides to work less and earn an income of only $85,000, of which 20 % x $85,000 $17,000 will be owed in
taxes.
With the redistribution plan, Jake will take home an income of
The $17,000 that Jake pays in taxes will be transferred by the government to Latasha. Let us assume that since Latasha now receives payment from
the government, she will not work as many hours and will earn an income from work of only $23,000 instead of her initial $25,000.
With the redistribution plan, Latasha's total income (including the government payment received) is…
Chapter 20 Solutions
Principles of Microeconomics (MindTap Course List)
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