In a country with 100 people, each person has a utility function given by U = LY, where L is hours of leisure per day and Y is daily income. If each person earns $50 per day and enjoys 10 hours of leisure, what is the value of the utilitarian social welfare function for the country as a whole?

Question

Quizplus · Accepted Answer

The utilitarian social welfare function is the sum of the utilities of all individuals in the society. Given U = LY for each person, with L = 10 hours of leisure and Y = $50 daily income, the utility for one person is 10 * 50 = 500. For 100 people, the total utility (social welfare) is 100 * 500 = 50,000.

In a Country with 100 People, Each Person Has a Utility