Problem-Set-2-Solutions-graph

Problem-Set-2-Solutions-graph - 1 (depends whether we are...

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The Following diagrams should help you understand the solution to question 2 in Problem set 2. The blue, green and black lines in the first slide indicate the utility of persons 1,2 and 3 respectively. The (thicker) line indicates the minimum utility perceived at each location and thus corresponds to the Rawlsian SWFU. As you can see, it is maximized where u1=u2 The second diagram shows the addition of the utilities. For locations less than 4.5 we have a slope of 3, and for locations between 4.5 and 25 the slope is +/

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Unformatted text preview: 1 (depends whether we are to the left or the right of 19.5) The reason for the change of slope being that the +1 slope of u1 cancels the 1 slope of u3 in this region. DISCLAMER: This is an approximate graph to convey a graphical idea, it is not meant to be exact and/or to scale. Utility Location 4.5 25 7.5 4.5 2.75 19.5 12 Utilitarian SWUF Location 4.5 25 19.5 20.5 Note: Maximum is clearly at location = 0 26 35.5...
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This note was uploaded on 01/14/2012 for the course ECON 201 taught by Professor Witte during the Spring '08 term at Northwestern.

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Problem-Set-2-Solutions-graph - 1 (depends whether we are...

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