Question

Question 37

1. Economic mobility refers to the

   	a.	ability of families to freely relocate to find good jobs.
   	b.	movement of resources from one country to another.
   	c.	movement of people among income classes.
   	d.	government's attempt to distribute monetary assistance to areas most in need.

Question 38

1. Diminishing marginal utility suggests that

   	a.	more is always preferred to less.
   	b.	the poor are less efficient at spending money than the rich.
   	c.	the well-being of society is maximized when the distribution of income is equal.
   	d.	the poor receive more satisfaction from the last dollar spent than the rich.

Question 39

1. A utilitarian government must

   	a.	pursue policies that do not affect the middle class.
   	b.	calculate the utility of each individual in society.
   	c.	balance the gains from greater equality against the losses from distorted incentives.
   	d.	avoid enacting any policies that redistribute income from the rich to the poor.

Answer 1

Q37: Economic mobility refers to the ability of movement of people among income classes. The measurement units is  of income quintiles. Therefore C is the correct answer

Q38: Diminishing marginal utility suggests that as the consumption of a commodity increases to more and more units, the marginal utility derived from each additional unit declines. Therefore he poor who have less money with them will receive more satisfaction or utility from the last dollar spent than the rich who have the capacity to spend more. Therefore D is the correct answer Looking it at like this that if there are two people, A and B and they eary 80000 and 20000 dollars respectively. If the government taxes both for 1000 it is taxing B at a greater percentage and reducing his utility by a greater margin than for A

Q39: A utilitarian is governed by the maxim, "The greatest amount of good for the greatest number of people" this may imply that it would suggest to completely redistribute incomes between rich and poor but that is not the case because if that is the case, the people earning higher income will have no incentive to work hard and neither will those who earn lower incomes so this will result in lower total utility fo the society. Therefore Utilitarian theory accepts the tenet that people need incentives to create utility. Therefore under this theory, the government acts as a balancing agent between gains created through greater equality and the losses incurred due to incentives lost  Therefore C is the correct answer