Multiple choice

Which of the following principles is applied to redress the imbalance between distribution and welfare?

  1. Principle of taxation

  2. Principle of compensation

  3. Principle of effective demand

  4. Principle of supply
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to the compensation principle, if the prospective gainers could compensate any prospective losers and leave no one worse off, the other state is to be selected . An example of a compensation principle is the Pareto criterion in which a change in states entails that such compensation is not merely feasible but required.

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