New York state is considering two policies to help housing affordability for low income families with incomes less than $30,000. The first policy would provide a lump sum of $6000 to spend only on housing. The second policy would provide a dollar-for-dollar match to households on their first $6000 of housing - so $1 would buy 2 units of housing up to $6000. We will look at the effects of these two policies on a representative family with $30,000 in income who buys housing and the composite good.

(a) Graph the budget constraint of the representative family who has $30,000 in income with the composite good on the y-axis and housing on the x-axis. Assume one unit of housing costs $1 and one unit of the composite good costs $1.

(b) Graph the budget constraint for the representative family under the first policy on your graph from part (a). Carefully mark any kinks in the budget constraint and make sure any intersections with the budget constraint in part (a) are correct. Again assume that one unit of housing costs $1 and one unit of the composite good costs $1.

(c) Graph the budget constraint for the representative family under the second policy on your graph from part (a). Carefully mark any kinks in the budget constraint and make sure any intersections with the budget constraints in part (a) and (b) are correct. Again assume that one unit of the composite good costs $1 and the housing subsidy is describe above. Once the family spends $6000 on housing, housing again costs $1 per unit.