Question

Assume that two people, Jim and Stacy, are deciding how to split resources between them. Their utility possibilities curve is represented by Uk = sqrt(100 - Up^2), where Uk represents Stacy's utility, and Up represents Jim's utility. Stacy believes in a strictly utilitarian view of social welfare, and wants the allocation to reflect the optimal point from that view. Jim, on the other hand, is a strict Rawlsian. Draw a graph showing the shape of the UPC and at least one of Stacy's social indifference curves and one of Jim's social indifference curves. Can the two people reach a consensus about the state of society?

Answer 1