Suppose that the government is considering whether to give an income supplement or food vouchers to a certain group of the population who are currently on low incomes. A survey reveals that a typical...

Suppose that the government is considering whether to give an income supplement or food vouchers to a certain group of the population who are currently on low incomes. A survey reveals that a typical household in this group has a net weekly income of £48 and spends £16 on food and £32 on other goods. Using an indifference curve map between food and other goods, show that a £20 income supplement may possibly give greater satisfaction than £20 worThof food vouchers, but not vice versa.

Assume that vouchers cannot be traded and can only be used in the week for which they are issued.




May 26, 2022
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