Redistributing income from the rich to the poor creates inefficiency because
A) of wasteful expenditures by people receiving welfare grants.
B) of the administrative costs to operate the government redistribution agencies.
C) the redistribution creates an incentive to produce less output.
D) Both answers B and C are correct.
E) Both answers A and C are correct.

Question

Quizplus · Accepted Answer

Redistributing income involves administrative costs and can also create disincentives for production, leading to inefficiency in the economy.

Redistributing Income from the Rich to the Poor Creates Inefficiency