A social planner must allocate income between two people, A and B, in a mini-economy. A produces more utility than B from the same income. The utility possibilities set for A and B would be curved, showing greater total utility when more income is given to A. A Rawlsian social welfare function would allocate most income to the worse off (B), while a Utilitarian function would allocate more to A to maximize total utility for both individuals. The two approaches can lead to different allocation outcomes due to their different philosophical views of fairness.
HỌC TỐT TIẾNG ANH 11 THEO CHƯƠNG TRÌNH GLOBAL SUCCESS ĐÁP ÁN CHI TIẾT - CẢ NĂ...
Utility Possibilities Set for Two-Person Economy with Social Planner
1. Suppose there is a mini-economy with two people A and B. A social planner has some income to
allocate between them. (a) Suppose A is a "better utility producer" than B. Assume both people
only care about their own allocation. Draw a plausible utility possibilities set for the two people and
explain briefly two important features of the shape you have given it. [8] (b) Use your part (a)
diagram to illustrate what a RawIsian and a Utilitarian social welfare function would choose as the
social optimum. [6] (c) Describe and explain the reasons for any differences between the two
outcomes you showed in part (b). [6]
![Suppose there is a mini-economy with two people A and B. A social planner has some income to
allocate between them. (a) Suppose A is a "better utility producer" than B. Assume both people
only care about their own allocation. Draw a plausible utility possibilities set for the two people and
explain briefly two important features of the shape you have given it. [8] (b) Use your part (a)
diagram to illustrate what a RawIsian and a Utilitarian social welfare function would choose as the
social optimum. [6] (c) Describe and explain the reasons for any differences between the two
outcomes you showed in part (b). [6]](https://image.slidesharecdn.com/supposethereisaminieconomywithtwopeopleaandbas-230321044055-32434fca/85/suppose-there-is-a-minieconomy-with-two-people-a-and-b-a-spdf-1-320.jpg)
