The utility possibility frontier for two individuals is given by UA + 2UB = 200. (2...

The utility possibility frontier for two individuals is given by U_A + 2U_B = 200.

On the graph paper provided, plot the utility possibility frontier.

Based on the function W (U_A, U_B) =max{U_A, U_B} on the utility possibility frontier in part (a), in order to maximize a Nietzschean social welfare function, what should be the values of U_A and U_B?

If we use a Rawlsian criterion, W (U_A, U_B) =min{U_A, U_B}, in order to maximize the social welfare function, what should be the values of U_A and U_B?
1. If the social welfare is given by W (U_A, U_B) = U_A^1/2, U_A^1/2, in this case, with the utility possibility frontier in part (a) what should be the values of U_A and U_B if social welfare is to be maximized?
1. On the same graph plotted in part (a), show the three social maxima by drawing a Nietzschean isowelfare line through the Nietzschean maximum, a Rawlsian isowelfare line through the Rawlsian maximum and a Cobb-Douglas isowelfare line through the Cobb-Douglas maximum.

Expert Solution

Rahul Sunny answered 8 months ago

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