a) For a two consumer economy with arbitrary well behaved utility functions, draw a properly labelled...

 

Transcribed Image Text:

a) For a two consumer economy with arbitrary "well behaved" utility functions, draw a properly labelled utility possibility frontier diagram and clearly indicate allocations preferred by the utilitarian and the maximin social welfare functions. (3 marks) b) Suppose there are two people in the economy and the Utility Possibility Frontier is U = 2 x+j- given by: where uj is the utility of person i for i =1 or 2 and where X and are positive fixed amounts of goods x and y in the economy. (i) What outcome in terms of utility levels is preferred by a utilitarian social welfare function (SWF)? (4 marks) (ii) What outcome in terms of utility levels is preferred by a maximin SWF? (3 marks) a) For a two consumer economy with arbitrary "well behaved" utility functions, draw a properly labelled utility possibility frontier diagram and clearly indicate allocations preferred by the utilitarian and the maximin social welfare functions. (3 marks) b) Suppose there are two people in the economy and the Utility Possibility Frontier is U = 2 x+j- given by: where uj is the utility of person i for i =1 or 2 and where X and are positive fixed amounts of goods x and y in the economy. (i) What outcome in terms of utility levels is preferred by a utilitarian social welfare function (SWF)? (4 marks) (ii) What outcome in terms of utility levels is preferred by a maximin SWF? (3 marks)

Answer rating: 100% (QA)

from a yoven mctase g ht stak ID 74163846 23 UTILITY FUNCTION CONSU MER E9ULLBRIUM utility utility ... View the full answer