A food stamp is a voucher that can be used only to purchase food. Suppose that the

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A food stamp is a voucher that can be used only to purchase food. Suppose that the government provides eligible people with food stamps worth 20 units of food. Suppose further that the market value of each unit of food is \(\$ 5\). Can we conclude that an individual would be worse off if provided with a cash grant of \(\$ 50\) instead of the food stamps? (Hint: Analyze a model in which the individual chooses between two commodities, "units of food" and "all other goods.")

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Public Finance

ISBN: 9780073511283

8th Edition

Authors: Harvey Rosen, Ted Gayer

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