Norms Dictating That Any Community Member Earning Unusually High Income

question 24

Multiple Choice

Norms dictating that any community member earning unusually high income give transfers to members with lower incomes ________ individuals' incentives to invest and innovate,because individuals must bear ________ of innovation while expecting to enjoy ________ the returns.

• A) reduce; a fraction of the cost; all of
• B) increase; a fraction of the cost; only a fraction
• C) reduce; the full cost; only a fraction of
• D) increase; the full cost; all of

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Definitions:

Utility Function

A mathematical representation that ranks consumer preferences over a set of goods or services, often leading to an optimal choice.

Consumption

The usage of goods and services by households or individuals, forming a major component of aggregate demand in an economy.

Income

Income refers to the money received by an individual or entity, typically in the form of wages, salaries, or returns from investments, over a specified period of time.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.