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Assume that a society has a utilitarian Social Welfare Function (SWF). Each individual utility function is represented by:U =square root of C, where C =
Assume that a society has a utilitarian Social Welfare Function (SWF). Each individual utility function is represented by:U =square root of C, where C = consumption = income. Suppose that ten percent (10%) of citizens are single mothers, who rely on TANF, with an initial representative income of $10,000 and ninety percent (90%) of citizens have an initial representative income of $50,000. Next, suppose that a new policy cuts the TANF benefit, which leads to single mothers' income to drop to $5,000, but the income of everyone else increases to $51,000. [Hint: Aggregation or total social efficiency and welfare, in this case, is achieved via respective weighted averages.]. Compute Total Social Efficiency before and after the new policy
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