Ayushi posted an Question
August 14, 2020 • 05:00 am 30 points
  • UGC NET
  • Economics

31. according to dalton, the total social advantage becomes maximum when taxation and expenditure are carried to a point where (1) marginal social sacrifice (ms

31. According to Dalton, the total social advantage becomes maximum when taxation and expenditure are carried to a point where (1) Marginal Social Sacrifice (MSS) > Marginal Social Benefits (MSB) (2) Marginal Social Sacrifice (MSS) < Marginal Social Benefits (MSB) (3) Marginal Social Sacrifice (MSs) = Marginal Social Benefits (MSB) (4) None of the above

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    Nidhi taparia Best Answer

    The correct answer is (3). Dalton, one of the most famous public finance economists of all time, propounded the principle of public finance or principle of maximum social advantage. He said that total social advantage is maximised when the difference between total social benefit and total social sacrifice is maximised. And this happens when Marginal Social Benefit becomes equal to Marginal Social Sacrifice. This is just like what we studied in producer's theory. Firm's profit is maximised when MC = MR.

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