Sven, Art, and Isabel Reside on a Tiny Island in the Pacific

question 29

Multiple Choice

Sven, Art, and Isabel reside on a tiny island in the Pacific. All three of them have a utility function given by U = Y^0.5, where Y is income per day. Suppose that Sven earns $7 per day, Art earns $25 per day, and Isabel earns $36 per day. What happens to the value of the utilitarian social welfare function If the government takes $9 of Art's income and gives it to Sven?

• A) The utilitarian social welfare function will increase from 13.65 to 14.
• B) The utilitarian social welfare function will remain unchanged at 68.
• C) The utilitarian social welfare function will decrease from 15.50 to 12.30.
• D) The utilitarian social welfare function will increase from 8.20 to 12.

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