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The table below reflects the levels of total utility received from income for each of four members of a society. Assume that the society has the following income distribution:
Peter $3
Paul $7
a. 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. Assume that the government has $19 to allocate among the four members of society.
b. (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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