Question 24 - Social Welfare

Consider a society composed of three individuals: A, B, and C. Let W equal wealth, where W_A represents Individual A’s wealth, and so on.

Individual A W_A

Individual B W_B

Individual C W_C

Assume that we, society, can make Individual B better off without harming either Individual A or Individual C. Should we exercise our option of making Individual B better off?

W_A + W_B + W_C = SOCIAL WELFARE

What impact would this action have on social welfare?

Answer