Suppose that you are responsible for proposing an income redistribution program to the Ontario Minister of...

 

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Suppose that you are responsible for proposing an income redistribution program to the Ontario Minister of Finance. You have compiled the following analysis on the current division of wealth among the two major stakeholder groups in question (rich and poor). Your analysis depicts the current Pareto optimal allocation (E₁) resulting from the initial endowments (w₁). XRich yPoor OPoor E₁ ICB₁ -ICA₁ W1 Price Ratio CC ORich YRich XPoor a) If the social goal is to redistribute income between the rich and poor such that prices will lead to an allocation at E₂ then suggest a taxation method to achieve this goal without any loss in efficiency. Complete your diagram above to include your taxation method that will achieve the allocation at E₂. [2 points] b) What are the conditions that must be present for your taxation method to be viable? [1 point] Suppose that you are responsible for proposing an income redistribution program to the Ontario Minister of Finance. You have compiled the following analysis on the current division of wealth among the two major stakeholder groups in question (rich and poor). Your analysis depicts the current Pareto optimal allocation (E₁) resulting from the initial endowments (w₁). XRich yPoor OPoor E₁ ICB₁ -ICA₁ W1 Price Ratio CC ORich YRich XPoor a) If the social goal is to redistribute income between the rich and poor such that prices will lead to an allocation at E₂ then suggest a taxation method to achieve this goal without any loss in efficiency. Complete your diagram above to include your taxation method that will achieve the allocation at E₂. [2 points] b) What are the conditions that must be present for your taxation method to be viable? [1 point]

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A A viable answer withinside the brief run could be a revolutionary tax machine with switch bills li... View the full answer