Vertical Equity Refers to the Idea That

question 160

Multiple Choice

Vertical equity refers to the idea that

• A)people with greater ability to pay should pay more.
• B)people who are situated differently should pay differently but in a manner deemed fair by society.
• C)people who are situated equally should pay equally.
• D)the people who derive the benefits from services should be the ones who pay for the services, provided they have the ability to pay.

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Definitions:

Uncertain Income

Uncertain income refers to earnings that fluctuate and are not guaranteed, often associated with irregular work or investment returns.

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Marginal Utility

The added gratification or usefulness experienced from the consumption of an additional unit of a good or service.

Risk-Averse

A characteristic of preferring to avoid risk, often leading to choices that have lower potential returns to minimize possible losses.