Suppose Stacey obtains 7 units of utility from the last dollar of income she receives and Raj obtains 7 units of utility from his last dollar of income. Assume both Raj and Stacey have the same capacity to derive utility from income with identical marginal-utility-of-income-curves. Those who favor an equal distribution of income would:

Question

Quizplus · Accepted Answer

Since both Stacey and Raj derive the same utility from their last dollar of income and have identical marginal-utility-of-income-curves, an equal distribution of income would be considered optimal, and no redistribution is necessary.

Suppose Stacey Obtains 7 Units of Utility from the Last