If raising taxes through Policy A yields more economic surplus than raising taxes through Policy B, then:
A) Policy A is more efficient and equitable than Policy B.
B) Policy A is more efficient than Policy B but may not be more equitable than Policy B.
C) Policy A is more equitable than Policy B but may not be more efficient than Policy B.
D) Policy A is less efficient and equitable than Policy B.

Question

Quizplus · Accepted Answer

Economic surplus is a measure of efficiency, not equity. Therefore, if Policy A yields more economic surplus, it is more efficient. However, this does not necessarily mean it is more equitable, as equity concerns the fairness of the distribution of economic benefits and burdens.

If Raising Taxes Through Policy a Yields More Economic Surplus