Answer to Question #247303 in Microeconomics for Chilu

Question

2 Give an example of a social welfare function that leads to the egalitarian allocation that everyone should be given exactly the same bundle of goods. 5.3 Suppose that society used the à ¢ € œoppositeà ¢ €  of a Rawlsian welfare function: It tried to maximize the wellbeing of the best-off member of society. Write this welfare function. What allocation maximizes welfare in this society?

Answer 1

The  Rawlsian welfare function measures the social welfare of society on the basis of the welfare of the least well-off individual member of society:

${\displaystyle W=\min(Y_{1},Y_{2},\cdots ,Y_{n})}$

The opposite of the Rawlsian welfare function can measure welfare of the society based on the welfare of the best well-off individual member of society.

${\displaystyle W=\max(Y_{1},Y_{2},\cdots ,Y_{n})}$

An allocation that maximizes the welfare of a society must be Pareto efficient. Pareto efficient is  is a constructive model in economics for determining whether a system or market is at an efficient state.