14.

Suppose there are 3 individuals in society and the government has the following utilitarian social welfare function: SW=U1+U2+U3 Further assume that each of the three individuals (1, 2, and 3) has the same utility function dened over income l: U.- = 10-5 fori = 1, 2, and 3 Individual 1's initial income is $30,000. Individual 2's initial income is $50,000. Individual 3's initial income is $100,000. If the government were not to use taxes or transfers to redistribute any income, social welfare would be 713 utils (enter only a number in the blank, and round to the nearest integer if necessary). Suppose again there are 3 individuals in society and the government has the following utilitarian social welfare function (SWF): SW = U1 + U2+ U3 Again assume that each of the three individuals (1, 2, and 3) has the same utility function defined over income |: Ui = 10.5 for i = 1, 2, and 3 Individual 1's initial income is $30,000. Individual 2's initial income is $50,000. Individual 3's initial income is $100,000. If there are no efficiency costs associated with redistribution, then in order to maximize social welfare given the SWF above, the government should use taxes and transfers to redistribute incomes such that individual 1's after-tax/transfer income is $ 50000 individual 2's after-tax/transfer income is $ 50000 and individual 3's after-tax/transfer income is $ 50000 (enter only whole numbers in the blanks, and round to the nearest dollar if necessary). Given this redistribution, social welfare would be 32 utils (again, enter only a whole number in the blank, and round to the nearest integer if necessary).Suppose again there are 3 individuals in society and the government has the following utilitarian social welfare function (SWF): SW = U1+ U2 + U3 Again assume that each of the three individuals (1, 2, and 3) has the same utility function defined over income |: Ui = 105 for i = 1, 2, and 3 Individual 1's initial income is $30,000. Individual 2's initial income is $50,000. Individual 3's initial income is $100,000. Now suppose there are efficiency costs associated with redistribution, such that each dollar the government taxes or transfers reduces income generated by some amount. Given these costs, the government has four options: A. No taxes and transfers such that I1 =$30,000, 12=$50,000, 13 =$100,000. B. Taxes and transfers such that I1 =$35,000, 12=$50,000, 13=$92,500. C. Taxes and transfers such that I1=$40,000, 12=$52,000, 13=$84,000. D. Taxes and transfers such that I1 =$55,000, 12=$55,000, 13 =$55,000. Which option results in the greatest level of social efficiency? Option A Which option results in the highest level of social welfare? Option D