Explain the equity-efficiency trade-off. Give an example of conflicting equity and efficiency outcomes of a policy

What will be an ideal response?

The equity-efficiency trade-off refers to the trade-off between ensuring an equitable distribution of resources (equity) and increasing social surplus or total output (efficiency). A progressive tax system helps in the redistribution of income from the rich to the poor and ensures greater equity. However, it discourages the rich to work and save more.