ECO 2110 Chapter Notes - Chapter 6: Paternalism, Marginal Utility, Redistribution Of Income And Wealth
9 Apr 2018
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Poverty line a fixed level of real income considered enough to provide a minimally adequate standard of living. An increase in any of the us, other things being the same increases w. Additive social welfare function w = u1+u2++un) Redistribute income as long as it increases w. The government should redistribute income so that complete equality is obtained. Social welfare depends only on the utility of the person who has the lowest utility. Objective is to maximize the utility of the person with the minimum utility. Implies that the income distribution should be perfectly equal, except to the extent that departures from equality increase the welfare of the worst-off person. Original position imaginary situation in which people have no knowledge of what their place in society is to be. Opinions on distributional goals are impartial and fair. Utility depends only on income redistribution can be a pareto improvement.
