If the marginal utility of income decreases as income increases, transferring income from the rich to the poor will

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Quizplus · Accepted Answer

This is based on the principle of diminishing marginal utility of income, which suggests that as a person's income increases, the additional satisfaction (utility) they get from an extra unit of income decreases. Therefore, transferring income from someone with a high income (who derives less additional utility from it) to someone with a low income (who derives more additional utility from it) increases the total utility across the society.

If the Marginal Utility of Income Decreases as Income Increases