Question
J spends all her money on food and other goods. She has an income of $600 per month. Suppose there are 2 welfare programs
J spends all her money on food and other goods. She has an income of $600 per month. Suppose there are 2 welfare programs she could participate in, A which provides her with a cash grant of $300 and B which provides here with $400 but which can only be spent on food (and not on prepared or restauarant food). a. Draw her BC in for both programs. b. Draw a representative IC that would reflect each of the following 3 scenarios. i. She prefers A to B. ii. She prefers B to A. iii. She is indifferent to which one she gets.
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Public Finance and Public Policy
Authors: Jonathan Gruber
4th edition
1429278455, 978-1429278454
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