5 Consider the analysis described in Figure 20.6. Tom and Dick each earn $25,000 per year. Tom has a spouse and two children, and Dick is unmarried. Health insurance and other goods trade off dollar for dollar (there is no tax advantage to health insurance).

(a) Where would each of the two be located on the budget constraint, and why?

(b) Which of the two would more likely take up a health insurance program, such as Medicaid?

(c) How would your answers to the fi rst two parts change if health insurance were sub sidized (as it is) relative to all other goods?