Gulliver travels to a country in which there are two types of creatures, the Houyhnhnms and the Yahoos, and there are equally as many Houyhnhnms as there are Yahoos. The accompanying table lists the possible combinations of utility levels. That is, the points in the table lie on this economy’s utility possibility frontier.
a. Draw the utility possibility frontier. When Gulliver arrives,
he notices that the Houyhnhnms have a utility of 120 and
the Yahoos have a utility of 50. Is this an efficient outcome?
b. Gulliver remembers that Jeremy Bentham argued that the
best outcome is the one that maximizes the sum of everyone’s utility. Which of the points A through E on the
utility frontier would Bentham have chosen as the best
outcome?
c. Gulliver then recalls that John Rawls argued that the best
outcome is the one that gives the most utility to whoever
happens to be the worst-off member in society. Which of
the points A through E would Rawls have chosen?