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“Discuss the likely impact on the UK economic performance of government policies designed to make income more evenly spread”
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Economics Essay Part II "Discuss the likely impact on the UK economic performance of government policies designed to make income more evenly spread" The UK government redistributes income because it believes that this will increase economic welfare. Market failure occurs when there is not full efficiency, and an uneven distribution is unlikely to be efficient. An example of how government policy can affect economic performance is with the law of diminishing marginal utility. This states that "for an individual, the satisfaction derived from consuming an extra unit of a good falls the greater the consumption of a good". This suggests that taking resources (i.e. Through taxation) from an affluent individual to give to a poor person will lead to an increase in the combined utility of the two individuals. For example, an extra £10 to a poor family will mean more than an extra £10 to a millionaire. Government expenditure can be used to...
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