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What is the difference between efficiency and equity? Why do government policymakers often face a trade-off between efficiency and equity?
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Government policymakers face a trade off problem between efficiency and equity, if they increase the income of the poor by taking a substantial part from the income of the rich. In this way, they will able to make fair distribution of income, but at the same time hamper the efficiency of production of goods and services, which is produced by the rich or the business class people. The business class or rich people will have less money to produce goods and services.
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hi. Today, we're gonna talk about efficiency. Richards Equity and wide policy makers tend to face a trade off between these two. Now, efficiency is usually concerned with producing wanted goods at the lowest production costs. Equity, on the other hand, is fairness. Now. Policy makers tend to 1/2 more fair economic outcomes. But doing so usually involved with distributing income from one group to a different look now redistributing income. It's a bit tricky and sometimes not always hampers efficiency because it reduces incentives to produce more and intends to drive our production costs. So policymakers in the one hand, won fair outcomes. But then that would sometimes imply that efficiency would decrease or if they want more efficient outcomes, that may lead to less fair outcomes. And this is a problem that old policymakers face when suggesting new policy changes.
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