The Essence of the Trade-Off Between Equality and Efficiency Is

question 49

Multiple Choice

The essence of the trade-off between equality and efficiency is that

• A)taxes and transfers reduce incentives to earn income, thus reducing GNP.
• B)people are ideologically opposed to socialistic income redistribution.
• C)redistribution violates the "work ethic."
• D)people are prejudiced against blacks and women.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a given market.

Long Run

A period in economics where all factors of production and costs are variable, allowing companies to adjust to achieve the most efficient scale of operation.

Operating Profits

Earnings before interest and taxes (EBIT), representing the profit from a business's normal core business operations.

Short Run

In economics, a period during which at least one of a firm's inputs is fixed, limiting the firm's capacity to adjust to changes in demand.