JNU SSS 2010 Question 45: Welfare economics and social choice
Consider a country in which there are four different types of people Red, Blue, Green and Yellow. All Reds earn the same income. The same is true about the Blues, Greens and Yellows. However the Red income, the Blue income, the Green income and Yellow income can be different from each other. A distribution of income of the country (Di) specifies the Red income, Blue income, Green income and Yellow income and also the number of Reds, Blues, Greens and Yellows. The following table gives the possible income distributions for the country :
Income: Red
Income: Blue
Income: Green
Income: Yellow
Number of Individuals: Red
Number of Individuals: Blue
Number of Individuals: Green
Number of Individuals: Yellow
D1
1
2
3
4
1
1
1
1
D2
3
4
1
2
1
1
1
1
D3
5
10
15
20
1
1
1
1
D4
0·8
1·6
2·4
5·2
1
1
1
1
D5
2·5
2·5
2·5
2·5
1
1
1
1
D6
1
2
3
4
5
5
5
5
Consider the five income distributions D1, D2, D3, D4, D5. Which of the following is true?
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Plain-text version
Consider a country in which there are four different types of people Red, Blue, Green and Yellow. All Reds earn the same income. The same is true about the Blues, Greens and Yellows. However the Red income, the Blue income, the Green income and Yellow income can be different from each other. A distribution of income of the country (Dᵢ) specifies the Red income, Blue income, Green income and Yellow income and also the number of Reds, Blues, Greens and Yellows. The following table gives the possible income distributions for the country: | Income: Red | Income: Blue | Income: Green | Income: Yellow | Number of Individuals: Red | Number of Individuals: Blue | Number of Individuals: Green | Number of Individuals: Yellow | D₁ | 1 | 2 | 3 | 4 | 1 | 1 | 1 | 1 | D₂ | 3 | 4 | 1 | 2 | 1 | 1 | 1 | 1 | D₃ | 5 | 10 | 15 | 20 | 1 | 1 | 1 | 1 | D₄ | 0·8 | 1·6 | 2·4 | 5·2 | 1 | 1 | 1 | 1 | D₅ | 2·5 | 2·5 | 2·5 | 2·5 | 1 | 1 | 1 | 1 | D₆ | 1 | 2 | 3 | 4 | 5 | 5 | 5 | 5 | Consider the five income distributions D₁, D₂, D₃, D₄, D₅. Which of the following is true? (A) There is no Pareto-optimal distribution (B) All distributions are Pareto-optimal (C) D₃ is the only Pareto-optimal distribution (D) D₁ and D₃ are the only Pareto-optimal distributions
Also written as: Consider a country in which there are four different types of people Red, Blue, Green and Yellow. All Reds earn the same income. The same is true about the Blues, Greens and Yellows. However the Red income, the Blue income, the Green income and Yellow income can be different from each other. A distribution of income of the country (D_i) specifies the Red income, Blue income, Green income and Yellow income and also the number of Reds, Blues, Greens and Yellows. The following table gives the possible income distributions for the country: | Income: Red | Income: Blue | Income: Green | Income: Yellow | Number of Individuals: Red | Number of Individuals: Blue | Number of Individuals: Green | Number of Individuals: Yellow | D_1 | 1 | 2 | 3 | 4 | 1 | 1 | 1 | 1 | D_2 | 3 | 4 | 1 | 2 | 1 | 1 | 1 | 1 | D_3 | 5 | 10 | 15 | 20 | 1 | 1 | 1 | 1 | D_4 | 0·8 | 1·6 | 2·4 | 5·2 | 1 | 1 | 1 | 1 | D_5 | 2·5 | 2·5 | 2·5 | 2·5 | 1 | 1 | 1 | 1 | D_6 | 1 | 2 | 3 | 4 | 5 | 5 | 5 | 5 | Consider the five income distributions D_1, D_2, D_3, D_4, D_5. Which of the following is true?
Welfare economics and social choice has come up 62 times in 6 exams since 2004.
What this question tests
This question is on Pareto efficiency and Pareto improvements, part of Welfare economics and social choice in Microeconomics.
What it means for an allocation to be efficient, checked in exchange economies and other settings.
TestStop has 40 past-paper questions on this subtopic.
