Q: Suppose in a change from State A to State B the sum of compensating varations (CV) is positive. In addition, the sum of equivalent variations (EV) is negative. If actual compenstation is paid to losers, is it true that social welfare will increase regardless of income? Explain with any assumptions you need to make.
A: So, for example, say if total CV is +10 and EV is -15...I guess the overall social welfare decreased by -5? Therefore, it is false that social welfare will increase regardless of the distribution of income? Is this even right? I'm just trying to guess a bit here...
2006-10-08 03:45:29 · 2 answers · asked by Anonymous in Social Science ➔ Economics
I don't think you can define "social welfare" precisely enough to analyse it with a simple mathematial formula.
The "pareto optimum" is a useful concept. A choice that makes one or more people better off without making anyone else worse off, it is pareto optimal, and therefroe to be chosen.
2006-10-11 19:31:33 · answer #1 · answered by MBK 7 · 1⤊ 0⤋
what does history tell you?
2006-10-11 05:17:44 · answer #2 · answered by nearrobinsnest 4 · 0⤊ 1⤋