Maximize the social welfare function

Assignment Help Macroeconomics
Reference no: EM132422618

Imagine the following (which is a rough approximation of the income distribution in the U.S.) There are 100 people with the following incomes.

10 earn 14

10 earn 25

10 earn 37

10 earn 50

10 earn 63

10 earn 80

10 earn 100

10 earn 130

10 earn 184

9 earn 360

1 earn 1300

A well-established assumption in economics is there is diminishing marginal utility to income. A common utility function is Utility for a person = ln(income). Assume each person has that same utility function.

Assume social welfare function is the sum of each individuals Utility. (NOT INCOME)

Given the distribution above what is total social welfare.

What distribution of income would maximize the Social welfare function?

What is total social welfare under that distribution?

People argue that redistribution would shrink the size of the pie or total income. Currently total income in my example is 11370. What could total income fall to but with optimal redistribution total social welfare be unchanged from its level without redistribution?

Reference no: EM132422618

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  Explain how stable is the currency against the us dollar

Explain how stable is the currency against the U.S. dollar? What are the projections for this country's expansion over the next 10 years?

  Characterized business process reengineering as evolutionary

Some observers have characterized Business Process Reengineering as evolutionary, others as revolutionary. Develop an argument to support one of these arguments i.e Evolutionary and Revolutionary? Please give a detailed answer.

  What is the difference between real and nominal gdp

What is the difference between real and nominal GDP? Does GDP accurately reflect the nation's welfare

  Quality management philosophies

Determine the main differences between re-engineering and continuous Improvement as Quality Management Philosophies?

  What are the main types of system calls

What are the main types of system calls? Describe their purpose.

  In the short run a firms cost of producing the hundreth unit

In the short run a firms cost of producing the hundreth unit of output is $10,000. If it makes just one more its $10,150. What is the marginal cost and average total for 101 units. Also average cost for 100 units?

  Find the first-order condition for the period-2

Do anticipated changes in m (that is, changes that are expected as of when rigid-price firms set their prices) affect y and Find the first-order condition for the period-2 policymaker's choice of G2 given D.

  What can you conclude about the elasticity of demand

Drawing Conclusions Airlines in the United States generally do not offer reduced round-trip airfares during holidays such as Easter, Thanksgiving.

  Illustrate what does this mean regarding the consumer

Illustrate what does this mean regarding the consumer surplus of the "last person" shown on the demand curve.

  Illustrate what are the three tools the fed

Illustrate what are the THREE tools the FED has at its disposal to manipulate or change the Money Supply and interest rates.

  What is the growth rate of real gdp

The growth rate of the money supply is 7%, the inflation rate is 3%, and velocity is constant. What is the growth rate of real GDP?

  What relationships are you trying to uncover

State your main research question (don't worry if your topic or question changes during the semester). What relationships are you trying to uncover?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd