1/2 of the population is unemployed with $500 in income; the other 1/2 are employed and earn $50,000 each individual has the utility function: U=4x(1/2) where x=individual's income Proposal 1) government taxes everyone with income at a flat rate of 10%. From the tax revenue, the government will refund the same amount to each person; regardless of their income Proposal 2) government taxes everyone at a flat rate of 10%. It will refund the same amount to each person according to the percentage of taxes paid. Question: compare the proposals under the utilitarian and Rawlsian social welfare functions. How do these proposals rank under each social welfare function? (all calculations can be done on a per-capita basis).
1/2 of the population is
Proposal 1) government taxes everyone with income at a flat rate of 10%. From the tax revenue, the government will refund the same amount to each person; regardless of their income
Proposal 2) government taxes everyone at a flat rate of 10%. It will refund the same amount to each person according to the percentage of taxes paid.
Question: compare the proposals under the utilitarian and Rawlsian social welfare functions. How do these proposals rank under each social welfare function? (all calculations can be done on a per-capita basis).
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