Economics Marginal Utility Questions
The relationship between marginal utility of income inequality and social welfare is that as income inequality increases, the marginal utility of income decreases for those with higher incomes and increases for those with lower incomes. This means that the additional satisfaction or well-being gained from an additional unit of income decreases for the rich and increases for the poor. From a social welfare perspective, this implies that reducing income inequality can lead to an overall increase in social welfare as it allows for a more equitable distribution of resources and a higher marginal utility of income for those with lower incomes.