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Q. Define Heterogeneity?
We know that breaking of the assumptions of homogeneity of agents, in welfare economics, makes it difficult to define social welfare function. Breaking of the assumption of homogeneity means we are going to accept that agents are not homogeneous, i.e., not identical in their tastes and preferences, incomes and intellectual grounds, in other words, they are heterogeneous.
Remember, this heterogeneity is the cause of conflict. Conflict is the cause of political existence. Its importance has been appreciated in some economic literature of public policy. Atkinson and Stieglitz (1900), for example, write, "If everyone had identical tastes and endowments, then many public finance questions would lose their significance, and this is particularly true of the behaviour of the state. If the interests of the members of society could be treated as those of ‘representative' individual, then the role of state would be reduced to that of efficiently carrying out agreed decision."
Types of production function
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One shortcoming of neoclassical welfare economics is that it does not take into account the institutional structure of collective decision making. To draw normative conclusions abo
PIGOVIAN APPROACH Pigou assumed that the aim of social policy is to 'promote welfare'. But in order to simplifL this, he chose to restrict the range of his inquiry to
eiplain why indifference curve are convex to the origin
1. is pareto improved demonstrated using the edgeworth box daigram?
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