An economy consists of two individuals, Lynne and Jonathan, whose utility levels are given by U L

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An economy consists of two individuals, Lynne and Jonathan, whose utility levels are given by U L and U J , respectively.
a. Suppose that the social welfare function is
W =UL+ UJ
True or false: Society is indifferent between giving a dollar to Lynne and a dollar to Jonathan.
b. Now suppose that, instead, the social welfare function is
W =UL+ 8UJ
True or false: Society values Jonathan’s happiness more than Lynne’s.
c. Now suppose that, instead, the social welfare function is
W= min[UL, UJ]
True or false: In this society, the optimal distribution of income is complete equality.
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Public Finance

ISBN: 978-0078021688

10th edition

Authors: Harvey Rosen, Ted Gayer

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