what is an equity efficiency tradeoff 
an equity efficiency tradeoff is when there is some kind of conflict between maximizing economic efficiency and maximizing the equity or fairness of society in some way when and if such a tradeoff exists economists or public policymakers may decide to sacrifice some amount of economic efficiency for the sake of achieving a more just or equitable society understanding the equity efficiency tradeoffan equity efficiency tradeoff results when maximizing the efficiency of an economy leads to a reduction in its equity as in how equitably its wealth or income is distributed economic efficiency producing those goods and services that provide the most benefit at the lowest cost is a primary normative goal for most economic theories this can apply to an individual consumer or a business firm but mostly it refers to the efficiency of an economy as a whole at satisfying the wants and needs of the people in the economy economists define and attempt to measure economic efficiency in several different ways but the standard approaches all involve a basically utilitarian approach an economy is efficient in this sense when it maximizes the total utility of the participants 1the concept of utility as a quantity that can be maximized and summed up across all people in a society is a way of making normative goals solvable or at least approachable with the positive mathematical models that economists have developed welfare economics is the branch of economics most concerned with calculating and maximizing social utility a conflict and tradeoff between efficiency and equity can occur if the members of society or the policymakers who decide how a society operates prefer other moral or ethical systems over pure utilitarianism when people decide that other moral values or rights outweigh pure utility maximization societies often pursue policies that do not lead to maximum social utility in favor of these other values the equity efficiency tradeoff is often associated with normative economics which emphasizes value judgments and statements of what ought to be examples of the equity efficiency tradeoffif the utility that one individual gains by poking another person in the eye is greater than the suffering caused then a purely utilitarian approach would permit or even encourage the eye poking to maximize total social utility however almost all people would agree that this violates basic morality and leads to an inequitable outcome for the eye poking victim in a more complicated example it is often the case that the greatest economic gains and thus the greatest total utility occurs when the most successful businesses and entrepreneurs earn higher incomes than others to encourage more productive behavior however this may lead to very unequal incomes when this happens policymakers may decide that it is better for society to redistribute some income from higher to lower income individuals for the sake of fairness even though this might reduce the utility of the high income earners or even society as a whole this is the most common form of the equity efficiency tradeoff though it also can involve the production distribution and consumption of all kinds of goods and services rather than just incomes 