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Jan has fallen on hard times. His income per week is 400 tk, spending 200 tk on food and 200 tk on all other goods.
Jan has fallen on hard times. His income per week is 400 tk, spending 200 tk on food and 200 tk on all other goods. However, he is also receiving a social allowance in the form of 10 food stamps per week. The coupons can be exchanged for 10 tk worth of food, and he only has to pay 5 tk for such coupons. Show the budget line with and without the food stamps. If Jan has homothetic preferences, how much more food will he buy when he receives the food stamps?
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