Sherry€™s utility is US and her income is YS. Marsha€™s utility is UM and her income is YM. Suppose it is the case that:

Define the Pareto efficient redistribution, and explain why the concept is relevant in this situation. Suppose that initially Sherry and Marsha both have incomes of $ 100. Assuming that the social welfare function is additive, what happens to social welfare if $ 36 is taken away from Marsha and given to Sherry?

Transcribed Image Text:

Us= 100 Ys2 and Uk= 100YW2 +0.81s