Question
Matt currently purchases 1 pound of broccoli per month .Suppose that the government would like Matt to increase his consumption of broccoli to at least
Mattcurrently purchases 1 pound of broccoli per month.Suppose that the government would like Matt to increase his consumption of broccolito at least 2 pounds per month.If the price of one pound of broccoli is $2, and all goods are normal:
Would an in-kind transfer of one pound of broccoliachieve the government goal?
1) No, it will not. 2 pounds of broccoli will not be affordable with an in-kind transfer of 1 pound of broccoli
2) Yes, it will.
3) No. It will not. Even though the in-kind transfer will make 2 pounds of broccoli just affordable, Matt will reallocate his income and spend less on broccoli to spend more on other goods.
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