The Table Below Reflects the Levels of Total Utility Received

question 159

Essay

The table below reflects the levels of total utility received from income for each of four members of a society.

a.Assume that the society has the following income distribution:
Peter: $3
Paul: $7
Mary: $5
Jane: $3
Is it possible for the government to increase total aggregate utility by redistributing income among members of society
Explain your answer.
b.Assume that the government has $19 to allocate among the four members of society.(Assume that no one has any income to start with.) If the government is interested in distributing income in a way that maximizes aggregate total utility, how should it distribute the $19 of income
c.Does the table above describe a situation characterized by diminishing marginal utility? Explain your answer.

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Definitions:

Depreciation

An accounting method used to allocate the cost of a tangible asset over its useful life.

Net Capital Spending

The total expenditure on physical assets less any asset sales, reflecting how much a company is investing in its physical assets.

CCA Rate

The annual depreciation rate used under the Canadian tax system to calculate depreciation expense for tax purposes on a depreciable asset.

CCA

An acronym that can stand for Capital Cost Allowance, which is a tax deduction for depreciable property in Canada.