In general an increase in income of,say,$1000
A) Increases the welfare of rich and poor equally
B) Increases the welfare of the rich more than the poor
C) Increases the welfare of the poor more than the rich
D) Has no impact on the welfare of rich or poor
E) Decreases the welfare of the very rich

Question

Quizplus · Accepted Answer

An increase in income of $1000 would have a much greater impact on the welfare of a poor person (assuming they are living below the poverty line) than it would on a rich person. The extra income would help the poor person to pay for basic necessities like food and shelter, whereas the rich person may not notice the increase as significantly. Therefore, an increase in income would increase the welfare of the poor more than the rich.

In General an Increase in Income Of,say,$1000