The principle of diminishing marginal utility can potentially be used to support policies that redistribute income.This principle suggests that increases in income for an individual will generate less additional happiness the higher the level of income.

Question

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The principle of diminishing marginal utility holds that as a person's income increases, the marginal utility or satisfaction gained from each additional dollar decreases. Therefore, redistributing income from high-income individuals to low-income individuals can increase overall well-being, as the additional dollar will provide more utility or happiness to the low-income individual than it would to the high-income individual. This supports policies such as progressive taxation and welfare programs that aim to reduce income inequality.

The Principle of Diminishing Marginal Utility Can Potentially Be Used