Explain the utilitarianism principle. How is it deficient? ...

[nummyann]

Explain the utilitarianism principle. How is it deficient?
 
  What will be an ideal response?

Question 2

In the above figure, the intersection of curves A and C is the point at which
 
  A) average total cost is minimized.
  B) average variable cost is minimized.
  C) average fixed cost is minimized.
  D) total product is maximized.

[frankwu0507]

Answer to Question 1

Utilitarianism is a principle that states that we should strive to achieve the greatest happiness for the greatest number. In order to do this, income must be redistributed from the rich to the poor until there is complete equality between all people. The rationale is that everyone has the same basic wants and a similar capacity to enjoy life. Also, the greater a person's income, the smaller is the marginal benefit of a dollar. By transferring money from the rich to the poor, more is gained than is lost and the two people added together are better off.
The deficiency is that the principle ignores the costs of making income transfers. Income can be redistributed through taxation. However, taxing people's income from employment makes them work less which results in the quantity of labor being less than the efficient quantity. Taxing people's income from capital induces them to save less. It results in the quantity of capital being less than the efficient quantity. With smaller quantities of both labor and capital, the quantity of goods and services produced is less than the efficient quantity.
In addition, not all of the increase in taxes collected would be transferred to the poor. Some of the tax collection would be used to cover administrative costs.

Answer to Question 2

B