Explanation The income inequality represents the unequal distribution of income across various economic participants of the economy. When there is income inequality, the poor people of the economy will earn very small income, whereas the rich will earn very high level of income from the economy. When the income inequality is lower, the difference between the income earned by the poorest fifth and richest fifth will be the minimum. The process of equalizing the society includes the redistribution of income from the rich to the poor. This includes taxing the rich and providing that amount to the poor sections of the society as financial assistances and aids and so forth. A utilitarian would favor this argument because they would like to have everyone equal incomes. Some income of the first individual will be transferred to the second individual through the form of tax from first individual and through the form of financial aid to the second. Thus, there will be a redistribution of income and this would lead to the increase in the total utility of the economy...

The difference between utilitarian, liberal and libertarian towards equalizing.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN: 9781285165875

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Question

Chapter 20, Problem 5QR

To determine

The difference between utilitarian, liberal and libertarian towards equalizing.

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If a country had perfect income equality what would the Lorenz curve look like?
Here is one hypothesis: A well-funded social safety net can increase economic equality but will reduce economic output. Explain why this might be so, and sketch a production possibility curve that shows this tradeoff.

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