ECON 101 2Midtermreview

There is a surplus of labour the quantity of labour

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Unformatted text preview: e “the greatest happiness for the greatest number.” If everyone gets the same marginal utility from a given amount of income, and if the marginal benefit of income decreases as income increases, then taking a dollar from a richer person and giving it to a poorer person increases the total benefit. Only when income is equally distributed has the greatest happiness been achieved. Utilitarianism ignores the cost of making income transfers. Recognizing these costs leads to the big tradeoff between efficiency and fairness. Because of the big tradeoff, John Rawls proposed that income should be redistributed to point at which the poorest person is as well off as possible. Symmetry principle is the requirement that people in similar situations be treated similarly. In economics, this principle means equality o...
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This note was uploaded on 03/29/2014 for the course ECON 101 taught by Professor Vanderwaal during the Spring '08 term at Waterloo.

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