Redistributing Income from the Rich to the Poor Creates Inefficiency

Multiple Choice

Redistributing income from the rich to the poor creates inefficiency because

A) of wasteful expenditures by people receiving welfare grants.
B) of the administrative costs to operate the government redistribution agencies.
C) the redistribution creates an incentive to produce less output.
D) Both answers B and C are correct.
E) Both answers A and C are correct.