How is the principle of diminishing marginal utility used to justify income redistribution?
The argument proposes that as income rises, the happiness associated with that income also rises, but by diminishing amounts. The decrease in utility that results from taking income from high-income groups may be less than the increase in utility generated by giving this income to low-income groups. The total utility in society would be enhanced by such redistribution if people have similar preferences for income. The exact utility income relationship is impossible to state, however, because of our inability to measure utility precisely or to make utility comparisons across individuals.
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Inventory investment is
a. never positive. b. often negative. c. can be either negative or positive. d. always positive.
Because market price remains constant as a perfectly competitive firm expands output, each firm faces
a. a downward-sloping demand curve b. a horizontal demand curve c. constant returns to scale d. constant costs e. diminishing marginal revenue