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Consider Jones - a typical welfare recipient who divides his monthly income of $300 between 'Cheese' and 'other goods'. The market price for cheese is
Consider Jones - a typical welfare recipient who divides his monthly income of $300 between 'Cheese' and 'other goods'. The market price for cheese is $2 per pound and the price of units of 'other good' is $1. Initially, Jones maximize his utility by consuming 260 units of 'other goods' and 20 pounds of 'cheese'. Suppose the government decides to provide an in-kind transfer and gives 60 pounds of cheese to Jones. Use the relevant graph to show that in-kind transfer results in a lower utility level than the same amount of cash transfer.
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