a.List and discuss four reasons leading to the existence of large inequalities in earned incomes among families in Canada.

b.Suppose two people, Mr. Mullinax and Ms. Fleming, must split a fixed income of $500. For Mr. Mullinax, the marginal utility of income isMU_m= 600 2I_m, while for Ms. Fleming, the marginal utility isMU_f= 600 3I_f, whereI_mandI_fare the amounts of income of Mr. Mullinax and Ms. Fleming, respectively.

i.What is the optimal distribution of income if the social welfare function is additive?

ii. What is the optimal distribution if society values only the utility of Ms. Fleming? What if the reverse is true? Explain your answer.