For the additive social welfare function to yield results,we must assume
A) individuals have identical utility functions.
B) individuals' utility functions have diminishing marginal utility of income.
C) the total amount of income available is fixed.
D) all of these answer options are correct.

Question

Quizplus · Accepted Answer

For the additive social welfare function to yield results, we need all three assumptions to be true. The first assumption (identical utility functions) ensures that we are comparing apples to apples when we add up individual utilities. The second assumption (diminishing marginal utility of income) ensures that each additional dollar of income is less valuable to a person as they become wealthier, so we can achieve a more equal distribution of income without reducing overall welfare. The third assumption (fixed total income) ensures that we are making choices based on distributional considerations and not simply increasing total income.

For the Additive Social Welfare Function to Yield Results,we Must