Humphrey and Lauren are splitting 10 gallons of soda and six pounds of popcorn. Let’s represent…

Humphrey and Lauren are splitting 10 gallons of soda and six pounds of popcorn. Let’s represent Humphrey’s preferences with the utility function UH  3SH  PH and Lauren’s preferences with UL  2SL  4PL, where SH and SL indicate their soda consumption, while PH and PL indicate their popcorn consumption. Consider the social welfare function W(UH, UL)  UH  UL. According to this social welfare function, which of the following two allocations is better: (1) SH  1, SL  9, PH  2, and PL  4, or (2) SH  5, SL  5, PH  3, and PL 3? Which

»Humphrey and Lauren are splitting 10 gallons of soda and six pounds of popcorn. Let’s represent Humphrey’s preferences with the utility function UH  3SH  PH and Lauren’s preferences with UL  2SL  4PL, where SH and SL indicate their soda consumption, while PH and PL indicate their popcorn consumption. Consider the social welfare function W(UH, UL)  UH  UL. According to this social welfare function, which of the following two allocations is better: (1) SH  1, SL  9, PH  2, and PL  4, or (2) SH  5, SL  5, PH  3, and PL 3? Which allocation does each consumer prefer? Considering all possible allocations, which is the most socially desirable? (Hint: How is social welfare affected by shifting a gallon of soda between Humphrey and Lauren? What about a pound of popcorn?)  

»