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PART 2: Cash or food voucher During lockdown period due to Covid 19, Government in many countries have provided a lot of support to vulnerable

PART 2: Cash or food voucher During lockdown period due to Covid 19, Government in many countries have provided a lot of support to vulnerable people. Government often provide two common supports including food vouchers or cash support. With food vouchers, recipients can only use these vouchers for food, not for other products, which can be considered as a composite good. These food vouchers cannot be redeemed for cash. 1. For vulnerable people, discuss how each support method above influences their utility maximization strategy. Draw relevant graphs to illustrate your discussion. 2. Many government prefer to provide food voucher instead of giving cash. Discuss motivation of government to provide food voucher. Is it contradicted with preferences of these vulnerable people? Briefly explain.

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