Question

The 'Principle of Maximum Social Advantage' (Dalton)

Q: Answer-The 'Principle of Maximum Social Advantage' (Dalton) states that the state should collect taxes and...

Explanation Economic efficiency in public finance is reached at the point where the utility lost from the last rupee of tax MSS is exactly equal to the utility gained from the last rupee spent by the government MSB.

states that the state should collect taxes and spend money until:

A Total tax revenue equals total public expenditure.

B Marginal Social Sacrifice (MSS) of taxation equals Marginal Social Benefit (MSB) of expenditure.

C The public debt is completely repaid.

D The Gini coefficient reaches zero.

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The 'Principle of Maximum Social Advantage' (Dalton)

Solution