Would it make any sense to say that, since a change in tax policy makes Jorge lose utility while Mary and Demitri gain utility, the policy is good if the loss in Jorge’s utility is less than the combined gain in Mary and Demitri’s utilities? How about the other way around—Jorge’s loss of utility is greater than Mary and Demitri’s combined gain?

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Question: In the context of a change in tax policy where Jorge loses utility while Mary and Demitri gain utility, analyze if it makes any sense to say that the policy is good in each of the following cases: 1. The loss in Jorge's utility is less than the combined gain in Mary and Demitri's utilities. 2. Jorge's loss of utility is greater than Mary and Demitri's combined gain.

Step by step solution

01

Case 1: Jorge's utility loss < Combined gain in Mary and Demitri's utilities

In this case, the total utility change in society is positive, as the combined gain in Mary and Demitri's utilities is greater than the loss in Jorge's utility. Therefore, it could be argued that the policy is good, especially if we consider the utilitarian principle, which seeks to maximize the total utility in society.
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Case 2: Jorge's utility loss > Combined gain in Mary and Demitri's utilities

In this case, the overall change in utility for this group of people is negative, as Jorge's loss of utility is greater than the combined gain in utility for Mary and Demitri. In this situation, it is difficult to argue that the policy is good since the total utility in society has decreased as a result of its implementation. In both cases, it is important to consider other factors and the broader implications of the policy. Utilitarianism has its limitations as a doctrine, and other principles, such as fairness and equity, should also be taken into account when evaluating the desirability of a policy. Thus, a comprehensive analysis of the policy should not solely rely on the consequences on individuals' utilities but also take into consideration the overall impact on society.

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Most popular questions from this chapter

Using the following information, calculate total utility and marginal utility. a. Plot the total utility curve. b. Plot marginal utility directly below total utility. c. At what marginal utility value does total utility reach a maximum? \(\begin{array}{lr}\text { Number of utils for the first unit } & 300 \\ \text { Number of utils for the second unit } & 250 \\ \text { Number of utils for the third unit } & 220 \\ \text { Number of utils for the fourth unit } & 160 \\\ \text { Number of utils for the fifth unit } & 100 \\ \text { Number of utils for the sixth unit } & 50 \\ \text { Number of utils for the seventh unit } & 20 \\ \text { Number of utils for the eighth unit } & 0 \\ \text { Number of utils for the ninth unit } & -250\end{array}\)

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