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Please make sure your answers are correct and answer each sub-question carefully and clearly. I will give positive feedback! 9. Mary consumes two goods. food
Please make sure your answers are correct and answer each sub-question carefully and clearly. I will give positive feedback!
9. Mary consumes two goods. food {a} and clothing {y}. She has a budget of S [30. Price of food is $2 for each unit. Price of clothing is $5 for each unit. {a} {b} {*3} Draw a budget line for this individual. Indicate the intercepts numerically {the vertical axis is y and horizontal axis is x]. The govemment wishes to subsidize consumption of' food by choosing either scheme: [. Inkind transfer scheme: ['3' units of food are provided for free. The food is not resalable. [1. Cash subsidy scheme: $211] is given to I'vlary1 who is an eligible person. Draw the new budget linesfsets for Mary under the two schemes. You can draw them in one diagram but you should indicate clearly the corresponding scheme that is represented by each linefset. Indicate intercepts and edges numerically. Use indifference curves to illustrate a case where Mary: (i) will be equally satisfied in both schemes. [Indicate the utility level before and alter the scheme is introduced.) {ii} will be better o" with cash subsidy than with inkind subsidy. [Indicate the utility level in the two schemes respectively.)Step by Step Solution
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