If All Individuals Have Identical Utility Functions and the Marginal

question 75

Multiple Choice

If all individuals have identical utility functions and the marginal utility of income decreases as income increases, transferring income ________ will ________ total utility.

• A) from the rich to the poor; increase
• B) from the rich to the poor; decrease
• C) from the rich to the poor; not change
• D) from the poor to the rich; not change

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good or service changes in response to a change in its price.

Consumption Reduction

A decrease in the amount of goods and services consumed by individuals or communities, often aimed at saving resources or money.

Price Increase

An upward adjustment in the cost of goods or services, often driven by factors like inflation, increased demand, or higher production costs.