Imagine a simple economy with only two people, Leroy and Percy. If the Social Welfare Function is W = U L + U P , and the Utility Possibilities Frontier is UPF = U L + 2U P , what will be the societal optimum?
The optimum would be a corner solution found the same way as if goods were perfect
substitutes. Percy receives none, and all goes to Leroy.
Economics
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In the real business cycle model, an increase in current total factor productivity leads to
A) an increase in investment. B) a decrease in investment. C) no change in investment. D) an ambiguous response of investment.
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For a number of years, General Motors used a pricing strategy designed to maintain at least 40 percent of the American car market. Does this strategy suggest that GM was maximizing profits or pursuing an alternative strategy?
Economics