56640 Public Sector Finance, Taxation and Accounting

Tutorial 7

Welfare, efficiency and equity

Tasks

1. Review the lecture and the course text on welfare, including a search on Gini
Coefficients.

2. Select a small number of countries (3-4) and try to find the gini coefficients,
share of government in GDP and GDP per capita (some of the figures you will
find from lecture slides 6 and supporting excel sheet 7)

3. Do you think that there are any relationships between the figures that you
have collected?

Questions to consider

 Explain how an edgeworth box might combine the indifference curve maps of
two individuals
 Explain the relationship between the Lorenz Curve and Gini Coefficients
 What are the conditions for a general equilibrium in production and
consumption?
 What do you understand by the term ‘distributive justice’?

Group Activity in the tutorial – to be discussed

DISCUSSION QUESTIONS - group work

1. Explain what an indifference curve is and show the equilibrium point

between a budget line and indifference curve.

2. Explain why the point of intersection of two indifference curves in an

edgeworth box is not a Pareto optimum.

3. Do you think that it is the role of government to pursue distributive

justice?