h1 answers - Homework #1 For all the questions below, you...

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Homework #1 For all the questions below, you need to show as much in detail as possible the process or the reasoning by which you arrive at the answer. Q.1 (20 points) Explain the reason why economic efficiency has to be compromised as a result of enhancing the equity in the society. Economic efficiency exists when society receives the maximum benefits from its scarce resources. Economic efficiency is comprised when that maximum benefit has to be shared or split between individual members of society in an effort to create equality. When society is equal, there is no way to reallocate the good or service without hurting someone else. To achieve greater equity, economic efficiency, in return, is reduced. For example, when the government chooses to help the less fortunate, resources are taken from the fortunate. Q.2 (20 points) You were planning to spend Saturday working at your part-time job, but a friend asks you to go skiing. What is the true cost of going skiing? Now suppose you had been planning to
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This note was uploaded on 05/10/2011 for the course ECON 500 taught by Professor Smith during the Spring '11 term at Cal Poly Pomona.

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h1 answers - Homework #1 For all the questions below, you...

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