Redistributing income from the rich to the poor creates inefficiency because
◦ of wasteful expenditures by people receiving welfare grants.
◦ of the administrative costs to operate the government redistribution agencies.
◦ the redistribution creates an incentive to produce less output.
◦ Both answers of the administrative costs to operate the government redistribution agencies and the redistribution creates an incentive to produce less output are correct.
◦ Both answers of wasteful expenditures by people receiving welfare grants and the redistribution creates an incentive to produce less output are correct.