Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please construct graphs Governments often try to encourage people to consume more of a particular good, for example. education. Produce an indifference curve and budget

please construct graphs

image text in transcribed
Governments often try to encourage people to consume more of a particular good, for example. education. Produce an indifference curve and budget constraint diagram with "all other goods" on the vertical axis and "education" on the horizontal axis. Show the consumer's optimum on this diagram before the existence of a subsidy. Now, suppose the government subsidizes education Illustrate the effect of the subsidy on the budget constraint and the consumer's optimum. (HINT: A subsidy lowers the price of a good). Suppose instead of subsidizing education, the government offers vouchers for education that can only be used to purchase education. On a new diagram (same axes as before), illustrate the consumer's optimum before the existence of the voucher. Illustrate the effect of the voucher on the budget constraint and the consumer's optimum. (HINT: The voucher cannot be used to purchase all other goods, so the budget constraint will be discontinuous at the level of education provided by the voucher)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quality Of The Environment An Economic Approach To Some Problems In Using Land, Water, And Air

Authors: Orris C Herfindahl, Allen V Kneese

1st Edition

1317386663, 9781317386667

More Books

Students also viewed these Economics questions