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Jamie has income of $600 per month that he can spend on a combination of food (F) and Wine (W). The price of F is

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Jamie has income of $600 per month that he can spend on a combination of food (F) and Wine (W). The price of F is $10 per unit, and the price of W is $15 per bottle. Given his low income Jamie is eligible for $200 worth of food stamps per month from the government. It is illegal to use food stamps directly to buy Wine. With the help of a sketch answer the following questions. (a): Use a well labeled sketch to describe Jamie's budget constraint that considers the food stamps. Represent F on the horizontal axis. [3 marks] (b): Suppose Jamie views 1 Food and 2 Wine as perfect complements (that is 1 unit of F goes with 2 bottles of W). What is Jamie's optimal monthly consumption of Food and Wine? [2 marks] (Note: it is possible to use sketch and intuition to obtain the correct optimal point without more involved math). (c): Suppose (while it is illegal to directly exchange food stamps for Wine) Jamie has found some dealers who are willing to accept his food stamps for cash but at the rate of 90 cents on the dollar (that is $0.9 cash for every $1 worth of food stamps). Given his preferences, should Jamie exchange his food stamps for cash? Briefly support your choice [2 marks] (d). Given his preferences, would Jamie be better off if the government offered cash instead of food stamps? Briefly support

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