ICAEW SE · Chapter 6 · Question 5 of 10
A company must choose one of three options. Its analysis of the effect on stakeholders, in units of wellbeing, is: Option 1: 300 people each gain 2 units; 40 people each lose 10 units Option 2: 100 people each gain 5 units; 10 people each lose 20 units Option 3: 50 people each gain 8 units; 200 people each lose 1 unit Which option would a strict utilitarian choose?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Option 2
Explanation
Utilitarianism chooses the action that produces the greatest total net benefit. Option 1: (300 x 2) - (40 x 10) = 200. Option 2: (100 x 5) - (10 x 20) = 300. Option 3: (50 x 8) - (200 x 1) = 200. Option 2 has the highest net benefit of 300 units. Option 1 benefits the most people, but utilitarianism compares total net welfare, not the number of people who gain.
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