Rank the three for a rawlsian social welfare function

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Reference no: EM131184643

Consider Bill and Ted, the two citizens in the country of Adventureland described in Problem 9 from Chapter 1.

Suppose that Bill and Ted have the same utility function U(Y) 5 Y1^/2, where Y is consumption (which is equal to net income).

a.roblem 9 from Chapter 1 for a utilitarian so Rank the three tax policies discussed in Pcial welfare function. Rank the three for a Rawlsian social welfare function.

b. How would your answer change if the utility function was instead U(Y) 5 Y^1/5?

c. Suppose that Bill and Ted instead have different utility functions: Bill's utility is given by U^B(Y) 5 1/4Y^1/2, and Ted's is given by UT(Y) 5 Y^1/2.

(This might happen for example, because Bill has significant disabilities and therefore needs more income to get the same level of utility.)

How would a Rawlsian rank the three tax policies now?

Effects of Redistributive Policies in Adventureland

	0%	25%	40%
Bats ore-tax Income	$1000	$800	$400
Bars taxes	0	200	160
Bill's net uncome	1000	600	240
Ted's pretax uxome	120	120	120
Ted's transfer payment	0	200	160
Ted's net Income	120	320	280

Reference no: EM131184643

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