Table: Melinda and Lucinda Refer to the Table

question 79

Multiple Choice

Table: Melinda and Lucinda $$\begin{array} { c c c } \hline \text { Income } & \begin{array} { c } \text { Melinda's utility } \\\text { from income }\end{array} & \begin{array} { c } \text { Lucinda's utility } \\\text { from income }\end{array} \\\hline \$ 10,000 & 100 & 200 \\20,000 & 180 & 300 \\30,000 & 250 & 350 \\40,000 & 310 & 380 \\50,000 & 360 & 400 \\60,000 & 400 & 410 \\70,000 & 425 & 415 \\80,000 & 435 & 417 \\\hline\end{array}$$ Refer to the table. This society consists of two people: Melinda and Lucinda. Melinda earns $80,000 and Lucinda earns $20,000. To maximize society's total utility (the sum of Melinda's and Lucinda's utility) , the government should take ______ from Melinda and give it to Lucinda.

• A) $30,000
• B) $10,000
• C) $20,000
• D) $40,000

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Definitions:

Fixed Administration Costs

Ongoing expenses not directly tied to production or sales volume, such as salaries of executive staff and office rent.

Inpatient Days

The total number of days that patients spend admitted to a hospital or healthcare facility for treatment.

Net Profit

The actual profit after working expenses not included in the calculation of gross profit have been paid.

Operating Leverage Factor

A measure indicating how a company's fixed costs relate to its variable costs, impacting profitability as sales levels change.