Answer to Question #309667 in Macroeconomics for Isay

Question

Discuss each of the following statements from the standpoints of equality and efficiency. a. Everyone in society should be guaranteed the best healthcare possible. b. When workers are laid off, they should be able to collect unemployment benefits until they find a new job. 

Answer 1

a. Everyone in society should be guaranteed the best healthcare possible.

The concept of equity is met by a guaranteed healthcare program, but the principle of efficiency is not met. It can be explained by the fact that the marginal benefit of keeping extra healthcare resources (such as excellent medical staff or sophisticated hospital technology) is always smaller than the marginal cost of establishing them.

b. When workers are laid off, they should be able to collect unemployment benefits until they find a new job. 

The notion of equity for all members of society in addressing their basic needs is suggested by the policy of guaranteed benefits for unemployed people. At the same time, it violates the efficiency principle by failing to stimulate individuals to search for work and resulting in a decline in labor supply.