Question

Would increasing the equality of income in the country necessarily increase the total utility of the country? Explain.

Hints:

(a) consider what different people use their money for food, medical care on the one hand and luxuries on the other. Which gives total utility? marginal utility?

(b) Read the posted readings before you answer this discussion question

Answer 1

Total utility of the country is defined as the total satisfaction that the population will get after consuming certain goods and services, with the concept of equality in terms of wages, incomes etc. will rise the purchasing power of the people, as more and more people will be able to purchase basic goods, utilize basic facilities, live healthier lives, thus rising the overall standard of living in the country.

Now calculating the total utility of a country as a whole does not neccessarily gives us the correct opinion about the population, as there is an existance of difference in terms of populations, there live upper liberals, middle class, daily wage earners etc, thus for this various groups the defination of utility is different, for daily wage earners having a proper two time meal is the level of satisfaction whereas for the middle class the example of two time food might refered as the law of marginal utility, similarly for the middle class the luxury car defines there total utility while for the upper liberals it act as a factor of law of diminishing marginal utility.

So, in the society in practical the utility of certain goods by certain groups changes the perspective of others goods in terms of satisfaction, thus it is wrong to say that income equality will definately or neccessarily lead to increase in the total utility of the country, there is an existence of probability.