Redistributing Income from the Rich to the Poor Creates Inefficiency

question 330

Multiple Choice

Redistributing income from the rich to the poor creates inefficiency because

• A) of wasteful expenditures by people receiving welfare grants.
• B) of the administrative costs to operate the government redistribution agencies.
• C) the redistribution creates an incentive to produce less output.
• D) Both answers B and C are correct.
• E) Both answers A and C are correct.