What is the big tradeoff? What will be an ideal ...

[littleanan]

What is the big tradeoff?
 
  What will be an ideal response?

Question 2

The median wage among physicians is over 166K a year, while the median salary for physician assistants is 86K a year.
 
  These salaries suggest that physicians have ________ human capital than physician assistants and hence the demand for labor for physicians is ________ than the demand for labor for physician assistants. A) more; less
  B) more; greater
  C) less; greater
  D) less; less

[upturnedfurball]

Answer to Question 1

The big tradeoff is the tradeoff between efficiency and fairness. The idea is that if the government redistributes income so that it is more equally shared, output decreases so that it is less than the efficient amount. Output shrinks because such redistribution blunts people's incentives to work. Hence redistributing income so that everyone has the same amount of income might end up insuring that everyone's incomes are smaller than if less redistribution is pursued.

Answer to Question 2

B

[littleanan]

Gracias!

[peter]

TYSM