Charlotte's demand for food is Price Quantity demanded 5 4 3 2 9 $10 9 8 7 6 2 3 4 5 6 7 8 1 The price of food is $6. Food stamps are available. People can purchase $1 of food stamps for $.50. Charlotte can buy, at most, $60 worth of food stamps (for $30).

a. Assuming Charlotte can't trade food and food stamps, how much food will Charlotte buy and at what total expenditure?

b. What is the gain (consumer's surplus) to Charlotte of being able to pur- chase food stamps?

c. Answer the same questions if Charlotte can only purchase $10 worth of food stamps (for $5).

d. Assume, once again, that Charlotte can purchase up to $60 worth of food stamps. If Charlotte can resell food and food stamps, how much food will Charlotte buy? How much food will Charlotte consume?

e. Which system does Charlotte prefer? Why do welfare agencies prevent resale of food stamps?