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Q3. In a world of two goods X and Y, the government is considering two different schemes to help the poor to buy more X,
Q3. In a world of two goods X and Y, the government is considering two different schemes to help the poor to buy more X, but at the same time, makes them equally better off. The price of good Y is 1. Scheme 1. Offer them a subsidy of s per unit. Scheme 2. The government will give an amount of money equivalent to the Equivalent Variation(EV) to the poor. Which scheme will cost the government less money
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