Question Suppose that a single mother of two kids earns 400 per week, and her housefhold consumed two goods : Food(Qfood) and Other Good (Qother). Suppose that the price of Food is 4 per unit ( Other Good is measured in monetary term, so the price of one unit is 1). The government is considering offering a special support programme using food voucher which will make Food more affordable for single mothers.(A2a) Using an indifference curve analysis, show below an equilibrium consumption bundle (Qfood0, Qother0) ( no need to pick specific numerical values for (Qfood0, Qother0) but indicates your equilibrium point clearly in the graph)

ECON4002 Coursework Problem Set page 8 Suppose that this mother is eligible for a food voucher that allows her to buy 40 units of Food per week (the voucher cannot be used to buy "Other Good"). (A2b) Show in the above graph the effect of the special support programme. Explain briefly below the changes that you introduced to the graph, including the income effect and/or the substitution effect. 6 marks (A2c) Not all single mothers with the likewise income level will necessarily increase their consumption of Food as a result of this programme. In fact, it is possible that the consumption of Food may become less than QFood. Indicate such a case in the above graph, and explain briefly below. 5 marks