The U.S. government provided a subsidy on food for poor people. E.g., they were required to pay $25 for $153 of food stamps, which could then be used to buy food. In effect, they paid $1 to receive $6.12(=153/25) worth of food. This subsidy amounts to $128(=15325), and the subsidy rate is =0.84(=128/153). Suppose x1 (food) and x2 (a composite good) are measured in $ terms, and so the budget line's slope without food stamps is 1. Under food stamps, the slope up to xI=$153 becomes p2(1)p1=0.6, and the budget set looks like that in figure 2.6 : The less poor households were required to pay more, say $83, for $153 of food stamps. Then the slope up to x1=$153 becomes steeper than the above case. Q2: Can you calculate the slope to show this? Add the corresponding budget line in figure 2.6 for comparison. The U.S. government provided a subsidy on food for poor people. E.g., they were required to pay $25 for $153 of food stamps, which could then be used to buy food. In effect, they paid $1 to receive $6.12(=153/25) worth of food. This subsidy amounts to $128(=15325), and the subsidy rate is =0.84(=128/153). Suppose x1 (food) and x2 (a composite good) are measured in $ terms, and so the budget line's slope without food stamps is 1. Under food stamps, the slope up to xI=$153 becomes p2(1)p1=0.6, and the budget set looks like that in figure 2.6 : The less poor households were required to pay more, say $83, for $153 of food stamps. Then the slope up to x1=$153 becomes steeper than the above case. Q2: Can you calculate the slope to show this? Add the corresponding budget line in figure 2.6 for comparison