Short Answer

Evaluating an Income Distribution Policy

In a simplified economic model, one lender's income is determined by collecting an equal share, 's', from five different borrowers. The lender's total income is 5s, and each borrower's income is 1-s. A policymaker proposes that to make the lender's income exactly double the income of a single borrower, the share 's' should be set to 1/3. Is this proposal correct? Justify your answer by showing the necessary calculations.

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Updated 2025-08-02

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