Notes: 3 A. In all questions below, assume goods can be bought and consumed (and activities done) in continuous quantities (ice., in fractional quantities), and that utility is gained proportional to the fraction (e.g., watching half a movie is half as satisfying as watching a whole movie -- obviously not really so). > B. Give values where any budget constraint touches either axis. You can also make up numbers on the two axes for utility maximization points if you like, but not required. > C. When you are asked to show a change in a graph, make sure to clearly indicate which line is the new one (e.g., by indicating the direction of change with an arrow). > 1. Jill has income of $150 per week and consumes two goods: housing and food. The price of housing is $1 per square foot per week. The price of food is $1 per oz. (Note: you will draw only one graph for this questions, so make it large enough to clearly show all of the changes.) = a. Draw a budget line for Jill (BL:). > b. Choose a point where Jill might maximize her utility and draw a well-behaved indifference curve (IC ) through it. > c. Suppose the government gives Jill an extra $50 per week. Add the new budget line (BL) to your graph. > d. Suppose the government instead gave Jill a voucher worth $50 of food every week (i.e., SNAP program, previously known as Food Stamps). Draw a new budget constraint (BL:] that shows her possible choices in this case. (You can use a new graph space for this if you like, but if so, also show the original budget constraint from (a) so it's clear how this new one relates to it. > e. Is Jill better off with the food voucher or the cash? You are welcome to make intuitive arguments here, but you should also support your answer using graphical analysis. >