There are 200 kgs of food that must be allocated between two sailors marooned at an island. The utility functions of the two sailors are given by where , i = 1, 2 is the quantity of food consumed by sailor i. Suppose the social welfare function is of the firm . How should food be allocated between the sailors so as to maximize social welfare ?
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There are 200 kgs of food that must be allocated between two sailors marooned at an island. The utility functions of the two sailors are given by u₁ = √(F₁), u₂ = 1/2√(F₂) where Fᵢ, i = 1, 2 is the quantity of food consumed by sailor i. Suppose the social welfare function is of the firm w = √(u₁) √(u₂). How should food be allocated between the sailors so as to maximize social welfare? (A) 200, 200 (B) 140, 70 (C) 100, 100 (D) None of the above
Also written as: There are 200 kgs of food that must be allocated between two sailors marooned at an island. The utility functions of the two sailors are given by u_1 = sqrt(F_1), u_2 = 1/2sqrt(F_2) where F_i, i = 1, 2 is the quantity of food consumed by sailor i. Suppose the social welfare function is of the firm w = sqrt(u_1) sqrt(u_2). How should food be allocated between the sailors so as to maximize social welfare?
Welfare economics and social choice has come up 62 times in 6 exams since 2004.
This question is on Social welfare functions and social choice, part of Welfare economics and social choice in Microeconomics.
Combining individual preferences into social judgements, and the limits of doing so.
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Question from the JNU SIS 2020 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.