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2.4 Sweden gives foreign aid to Guinea-Bissau. Assume that we can represent preferences of people in Guinea-Bissau by a representative individual and that this individual

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2.4 Sweden gives foreign aid to Guinea-Bissau. Assume that we can represent preferences of people in Guinea-Bissau by a representative individual and that this individual cares only about consumption of food and of other goods. Assume that we at present give foreign aid in the form of subsidy on food such that the price of food that this individual faces is lower. Consider a change in policy, such that food prices faced by this individual increased, but that she received sufficient money to buy her current consumption basket. Would this individual be better off with this alternative policy if indifference curves have the usual, convex, shape? Use a diagram to explain

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