An economy consists of two individuals, Lynne and Jonathan, whose utility levels are given by U₁ and U₁, respectively. a. Suppose that the social welfare function is W = U₁ + U₁ True or false: Society is indifferent between giv- ing a dollar to Lynne and a dollar to Jonathan. b. Now suppose that, instead, the social welfare function is W = U₁ + 8U, True or false: Society values Jonathan's hap- piness more than Lynne's. c. Now suppose that, instead, the social welfare function is W = min[U₂, U₁] True or false: In this society, the optimal dis- tribution of income is complete equality.

An economy consists of two individuals, Lynne and Jonathan, whose utility levels are given by U₁ and U₁, respectively. a. Suppose that the social welfare function is W = U₁ + U₁ True or false: Society is indifferent between giv- ing a dollar to Lynne and a dollar to Jonathan. b. Now suppose that, instead, the social welfare function is W = U₁ + 8U, True or false: Society values Jonathan's hap- piness more than Lynne's. c. Now suppose that, instead, the social welfare function is W = min[U₂, U₁] True or false: In this society, the optimal dis- tribution of income is complete equality.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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