Using the figure below, calculate the gain
from redistributing $25,000 from those earning $100,000...

Question

Using the figure below, calculate the gain
from redistributing $25,000 from those earning $100,000 to those earning
$50,000. Why do you think that this gain in well-being is smaller than the
redistribution in the example in the chapter, which redistributed from someone
earning $200,000 to someone earning $20,000? What are some potential problems
with this redistribution plan?

Robert · Accepted Answer

The answers are as follows:
With the redistribution plan, Darnell will take home an income of $ 90000*(1-0.25) = $67,500
With the redistribution plan, Eleanor's total income (including the government payment received) is now $(29000+22500) = $ 51500.
Without a redistribution plan,

Using the figure below, calculate the gain from redistributing $25,000 from those earning $100,000 to those earning $50,000. Why do you think that this gain in well-being is smaller than the...

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