Suppose a policy change will generate $180,000 of benefits for low-income families and $150,000 of costs for high-income and middle-class families. This change can best be described as
A) inefficient.
B) Pareto efficient.
C) potentially efficient.
D) equitable.

Question

Quizplus · Accepted Answer

This change is potentially efficient because the total benefits exceed the total costs, suggesting that those who benefit could theoretically compensate those who are harmed and still be better off, aligning with the concept of potential Pareto efficiency. However, whether it is equitable depends on value judgments about the distribution of costs and benefits across different income groups.

Suppose a Policy Change Will Generate $180,000 of Benefits for Low-Income