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Utilitarianism and Welfare

Description: Test your knowledge on the ethical theory of utilitarianism and its implications for welfare economics.
Number of Questions: 14
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Tags: utilitarianism welfare economics ethics economics
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What is the fundamental principle of utilitarianism?

  1. Maximize total utility.

  2. Maximize individual utility.

  3. Maximize social welfare.

  4. Minimize total costs.

Show answer
Correct Option: A
Explanation:

Utilitarianism is an ethical theory that holds that the best action is the one that produces the greatest amount of good for the greatest number of people.

According to utilitarianism, what is the ultimate goal of economic policy?

  1. Economic growth.

  2. Full employment.

  3. Price stability.

  4. Social welfare.

Show answer
Correct Option: D
Explanation:

The ultimate goal of economic policy according to utilitarianism is to maximize social welfare, which is the sum of the utilities of all individuals in a society.

What is the difference between act utilitarianism and rule utilitarianism?

  1. Act utilitarianism considers the consequences of individual actions, while rule utilitarianism considers the consequences of general rules.

  2. Act utilitarianism considers the consequences of general rules, while rule utilitarianism considers the consequences of individual actions.

  3. Act utilitarianism maximizes total utility, while rule utilitarianism maximizes individual utility.

  4. Act utilitarianism minimizes total costs, while rule utilitarianism maximizes social welfare.

Show answer
Correct Option: A
Explanation:

Act utilitarianism evaluates the morality of an action based on its consequences, while rule utilitarianism evaluates the morality of an action based on the consequences of the rule that would allow the action.

What is the problem of interpersonal utility comparisons?

  1. It is impossible to compare the utilities of different individuals.

  2. It is difficult to compare the utilities of different individuals.

  3. It is easy to compare the utilities of different individuals.

  4. It is not necessary to compare the utilities of different individuals.

Show answer
Correct Option: A
Explanation:

The problem of interpersonal utility comparisons arises because there is no objective way to measure the utility of different individuals. This makes it difficult to determine which actions will produce the greatest amount of good for the greatest number of people.

What is the veil of ignorance?

  1. A thought experiment in which individuals are asked to make decisions without knowing their own personal characteristics.

  2. A thought experiment in which individuals are asked to make decisions without knowing the personal characteristics of others.

  3. A thought experiment in which individuals are asked to make decisions without knowing the consequences of their decisions.

  4. A thought experiment in which individuals are asked to make decisions without knowing the preferences of others.

Show answer
Correct Option: A
Explanation:

The veil of ignorance is a thought experiment in which individuals are asked to make decisions about the distribution of resources without knowing their own personal characteristics, such as their race, gender, or socioeconomic status. This is intended to ensure that the decisions are made impartially and fairly.

What is the difference between cardinal and ordinal utility?

  1. Cardinal utility can be measured on a numerical scale, while ordinal utility can only be ranked.

  2. Ordinal utility can be measured on a numerical scale, while cardinal utility can only be ranked.

  3. Cardinal utility is subjective, while ordinal utility is objective.

  4. Ordinal utility is subjective, while cardinal utility is objective.

Show answer
Correct Option: A
Explanation:

Cardinal utility can be measured on a numerical scale, which allows for precise comparisons of the intensity of preferences. Ordinal utility, on the other hand, can only be ranked, which means that we can only say that one outcome is preferred to another, but we cannot say by how much.

What is the diminishing marginal utility of income?

  1. The marginal utility of income decreases as income increases.

  2. The marginal utility of income increases as income increases.

  3. The marginal utility of income is constant as income increases.

  4. The marginal utility of income is zero as income increases.

Show answer
Correct Option: A
Explanation:

The diminishing marginal utility of income means that the additional satisfaction that a person gets from each additional unit of income decreases as their income increases. This is because people tend to value the first few units of income more than the subsequent units.

What is the Pareto efficiency?

  1. A state of allocation of resources in which it is impossible to make one person better off without making someone else worse off.

  2. A state of allocation of resources in which it is possible to make one person better off without making someone else worse off.

  3. A state of allocation of resources in which it is impossible to make any person better off.

  4. A state of allocation of resources in which it is possible to make any person better off.

Show answer
Correct Option: A
Explanation:

A Pareto efficient allocation of resources is one in which it is impossible to make one person better off without making someone else worse off. This is also known as an optimal allocation of resources.

What is the Kaldor-Hicks efficiency?

  1. A state of allocation of resources in which it is possible to make one person better off without making anyone else worse off.

  2. A state of allocation of resources in which it is impossible to make one person better off without making someone else worse off.

  3. A state of allocation of resources in which it is possible to make any person better off.

  4. A state of allocation of resources in which it is impossible to make any person better off.

Show answer
Correct Option: A
Explanation:

A Kaldor-Hicks efficient allocation of resources is one in which it is possible to make one person better off without making anyone else worse off. This is a weaker condition than Pareto efficiency, which requires that no one be made worse off.

What is the compensation principle?

  1. The principle that those who benefit from a policy should compensate those who are harmed by the policy.

  2. The principle that those who are harmed by a policy should compensate those who benefit from the policy.

  3. The principle that the government should compensate those who are harmed by a policy.

  4. The principle that the government should compensate those who benefit from a policy.

Show answer
Correct Option: A
Explanation:

The compensation principle is a principle of distributive justice that holds that those who benefit from a policy should compensate those who are harmed by the policy. This is intended to ensure that the benefits of the policy are shared fairly among all members of society.

What is the difference between positive and normative economics?

  1. Positive economics describes what is, while normative economics prescribes what should be.

  2. Positive economics prescribes what should be, while normative economics describes what is.

  3. Positive economics is based on facts, while normative economics is based on values.

  4. Normative economics is based on facts, while positive economics is based on values.

Show answer
Correct Option: A
Explanation:

Positive economics is the study of economic phenomena as they are, while normative economics is the study of economic phenomena as they should be. Positive economics is based on facts and data, while normative economics is based on values and preferences.

What is the economic theory of justice?

  1. The theory that the distribution of resources should be based on merit.

  2. The theory that the distribution of resources should be based on need.

  3. The theory that the distribution of resources should be based on equality.

  4. The theory that the distribution of resources should be based on efficiency.

Show answer
Correct Option: C
Explanation:

The economic theory of justice is the study of how resources should be distributed among members of a society. There are many different theories of justice, but one of the most common is the theory of equality, which holds that resources should be distributed equally among all members of society.

What is the Rawlsian difference principle?

  1. The principle that social and economic inequalities should be arranged so that they are to the greatest benefit of the least advantaged members of society.

  2. The principle that social and economic inequalities should be arranged so that they are to the least disadvantage of the least advantaged members of society.

  3. The principle that social and economic inequalities should be arranged so that they are to the greatest benefit of the most advantaged members of society.

  4. The principle that social and economic inequalities should be arranged so that they are to the least disadvantage of the most advantaged members of society.

Show answer
Correct Option: A
Explanation:

The Rawlsian difference principle is a principle of distributive justice that holds that social and economic inequalities should be arranged so that they are to the greatest benefit of the least advantaged members of society. This principle is based on the idea that all members of society have a right to a certain minimum level of well-being.

What is the Nozickian entitlement theory of justice?

  1. The theory that people are entitled to the resources that they have acquired through just means.

  2. The theory that people are entitled to the resources that they have inherited.

  3. The theory that people are entitled to the resources that they have been given by the government.

  4. The theory that people are entitled to the resources that they have earned through their labor.

Show answer
Correct Option: A
Explanation:

The Nozickian entitlement theory of justice is a theory of distributive justice that holds that people are entitled to the resources that they have acquired through just means. This theory is based on the idea that people have a right to their own property and that this right cannot be violated by the government or by other individuals.

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