Imagine a simple economy with only two people, Augustus and Livia. a. Let the social welfare function be W= UL+UA where UL and U

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Imagine a simple economy with only two people, Augustus and Livia. a. Let the social welfare function be W= UL+UA where UL and U

A are the utilities of Livia and Augustus, respectively. Graph the social indifference curves. How would you describe the relative importance assigned to their respective well-being? b. Repeat part a when W= UL + 2UA c. Assume that the utility possibilities curve is as follows

Social Studies

1 answer:

bulgar [2K] · Answer 1 · 2023-05-25T21:09:16+03:00

The indifference curve is illustrated below.

<h3>How to explain the indifference curve?</h3>

The social utility function is W = UL + UA, then the social indifference curves are straight lines with a slope of -1.

We write W = UL + UA = 1. Rearranging the terms obtains: UL = 1 – UA

This is the algebraic form for this indifference curve. Geometrically, it’s a straight line with the slope -1.

We can construct indifference curves for other levels of the social utility:

UL = 2 – UA for W=2, UL = 3 – UA for W=3, etc.

This social utility function implies that society views Augustus and Livia as interchangeable members of society

If the social utility function is W = UL + 2UA, then the society values Augustus’ utility twice as much as Livia’s utility.

Learn more about indifference curves on:

brainly.com/question/14514309

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