2. (40 points) This question is going to ask you to create a written response to a. more gen- eral policy question using the concepts discussed in class about consumer's choice/ demand (note: you can include math and graphs: however, the expectation is responses will be explained with words and M just math/ graphs). Your response should be two paragraphs in length at most for each part. Be sure to use proper grammar to answer the question below. The government of Canada has created an absolute poverty line for Canada called the Market Basket Measure. The denition (link to StatsCan) is here and if you would like additional information, then this YouTube Video (link to YouTube.com) provided by StatsCan gives a good summary. The general idea is the Market Basket Measure keeps track of the cost for a set of goods the govern- ment has deemed to be necessities. It can be noted that the government keeps track of the cost of this basket in multiple locations as the price of various goods will differ in different parts of Canada. The cost of the basket in a particular part of Canada is the official government poverty line for Canada. To determine if a household is below the poverty line, the government will compare the dispos- able income of the household to the Market Basket Measure or cost in the areal. Households with a disposable income less than the cost of the basket of necessities are considered to be below the poverty line. (a) (20 points) The Market Basket Measure will naturally adjust as price levels change in an area. Notice, it is not an index; however, it could be used to create a price int/I B Mt >