Adam earns $25,000 a year and Bob earns $45,000 a year, and they both have the same marginal benefit curve. According to the utilitarian view, if a dollar is transferred from Bob to Adam, then
A)the change in Adam's marginal benefit plus the change in Bob's marginal benefit equals zero.
B)Adam's marginal benefit decreases by more than bob's marginal benefit increases.
C)Adam's marginal benefit increases by more than Bob's marginal benefit decreases.
D)the change in Adam's marginal benefit plus the change in Bob's marginal benefit is negative.
E)Bob's marginal benefit increases because he is being kind to Adam.

Question

Quizplus · Accepted Answer

According to the utilitarian view, transferring a dollar from Bob to Adam will have a positive impact on overall welfare if it leads to an increase in Adam's marginal benefit that is greater than the decrease in Bob's marginal benefit. Since both have the same marginal benefit curve, if a dollar is transferred from Bob to Adam, Adam's marginal benefit will increase by more than Bob's marginal benefit decreases. Therefore, the answer is C.

Adam Earns $25,000 a Year and Bob Earns $45,000 a Year