Table of Contents

ABSTRACT:It is being quoted across the cross country that income is being negatively associated with inequality, which suggests the absence of a trade-off between efficiency and equity. But this evidence assumes that all the countries are at a frontier in an efficiency-equity space. This world says “find a job or go hungry” or “succeed or suffer”, prodding us to get ahead economically telling us to stay in line with society. Awards, prizes are being awarded that allow the big winners to feed their pets better than the losers can feed their children. For this double standard of capitalist pursuing of the political and social system, democracy, capitalism is generating gaps in economic well being.Keywords: Efficiency, Trade-off, Equity. Frontier INTRODUCTION:About a century ago, many western governments began intervening in the market place and introducing a social safety net against socialistic pressures, but the attitude towards the welfare state evolved gradually into the mixed market economy. In such countries, the market is responsible for the production and pricing of most of the goods and services. One of the most controversial aspects of government policies involves policies towards the poor. should families have guaranteed incomes? Should taxation be progressive? Surprisingly these questions have been contentious as societies have become richer. Also, as the tax burdens have risen, tax revolts have sparked reductions in the tax rates. And today people ask: How much of the economic pie must be sacrificed in order to divide it more equally? How should we redesign income support programs to retain the objective of reducing want and inequality without bankrupting the nation?The purpose of this research paper is to examine the distribution of income along with the dilemmas of policies designed to reduce inequality. These issues are one of the most controversial economic questions of today. It is here that the cool-headed economic analysis of the trends in income and of the strengths as well as weaknesses of different programs which would have a larger payoff in promoting both a sense of fairness and continued rapid growth of the mixed economy.An equity-efficiency trade-off results when the productive efficiency of a market gets maximized. The equality-efficiency debates around the tradeoff when it focuses on growing economic inequality within a country where the economy is growing. where the academic discussion of equity- efficiency revolves around whether equity and efficiency are always inversely related or whether they can rise at once.The term “equity”” means it is associated with ‘a school of economics that is ideologically prescriptive’.Those concerned with the unequal distribution of economic resources may advocate public policy to limit productive efficiency. The aim of such advocacy is to generate a more equitable society. In these circumstances