Author Question: In what ways can income redistribution be viewed as a public good? What will be an ideal ... (Read 77 times)

jjjetplane · **on:** Jun 29, 2018

In what ways can income redistribution be viewed as a public good?

What will be an ideal response?

Question 2

What is producer surplus? How is it measured?

What will be an ideal response?

ntsoane kedibone · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Income redistribution may have many public benefits. It generates collective psychological benefits by making us feel better about ourselves. If it eliminates or reduces hunger, then disease may be reduced as well. There may be lower crime rates. However, income redistribution also suffers from the free-rider problem and the drop-in-the-bucket problem. Individuals can benefit from the drop in poverty even if they have not contributed. In addition, poverty is a huge problem and one person's contribution will likely have little effect.

Answer to Question 2

Producer surplus is the excess of the amount received from the sale of a good or service over the cost of producing it. The producer surplus is measured as the area under the price and above the supply curve over the entire quantity sold.