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Statement: Equality of Income Throughout a Community is the Essential Condition for Maximizing Utility in Which the Total Available Income Could Confer on the Members of that Community. Assumptions: - Logical Reasoning

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MCQ

In the following question, a given statement is followed by two assumptions I and II. An assumption is something supposed or taken for granted. You have to consider the statement and the following assumptions and decide which of the assumptions is implicit in the statement.
Statement: Equality of income throughout a community is the essential condition for maximizing utility in which the total available income could confer on the members of that community.
Assumptions:

  1. If extra income were taken from the rich and given to the poor, the total utility experienced by the community would increase.
  2. Equal pay for equal work.

Choose the correct option:

Options

  • If only assumption I is implicit;

  • If on assumption II is implicit;

  • If neither I nor II is implicit; and

  • If both I and II are implicit.

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Solution

If only assumption I is implicit;
One of the ways equality can be achieved is by taking extra income from the rich and giving to the poor. This is the assumption implicit in the statement made. There is no mention of work and hence II cannot be implied.

Concept: Statement and Assumption (Entrance Exam)
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