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c) Suppose you only buy two goods, food (x) and clothing (y), and the government offers you 50 coupons for free food. Each coupon allows you to redeem it at any food store for one unit (such as kilogram) of food. The price of food, Px, is $5 per unit and the price of clothing, Py, is $10 per unit. The government prints your name on the coupon and it requires the store to check your photo ID to ensure your identity. Income is $400. d) Continue with part c): Suppose the government wants to cut administrative costs and would no longer print names on the 50 coupons it gives you. You can sell none, some or all of the coupons in the black market for $3 each. You get cash from selling these coupons. Clothing (4) Clothing (y) 20 20 Go 10 d 1 60 + X 80 100 food (x) food (x) 3

c) Suppose you only buy two goods, food (x) and clothing (y), and the government offers you 50 coupons for free food. Each coupon allows you to redeem it at any food store for one unit (such as kilogram) of food. The price of food, Px, is $5 per unit and the price of clothing, Py, is $10 per unit. The government prints your name on the coupon and it requires the store to check your photo ID to ensure your identity. Income is $400. d) Continue with part c): Suppose the government wants to cut administrative costs and would no longer print names on the 50 coupons it gives you. You can sell none, some or all of the coupons in the black market for $3 each. You get cash from selling these coupons. Clothing (4) Clothing (y) 20 20 Go 10 d 1 60 + X 80 100 food (x) food (x) 3

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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c) Suppose you only buy two goods, food (x) and clothing (y), and the government offers you 50 coupons for free food. Each coupon allows you to redeem it at any food store for one unit (such as kilogram) of food. The price of food, Px, is $5 per unit and the price of clothing, Py, is $10 per unit. The government prints your name on the coupon and it requires the store to check your photo ID to ensure your identity. Income is $400. d) Continue with part c): Suppose the government wants to cut administrative costs and would no longer print names on the 50 coupons it gives you. You can sell none, some or all of the coupons in the black market for $3 each. You get cash from selling these coupons. Clothing (4) Clothing (y) 20 20 Go 10 d 1 60 + X 80 100 food (x) food (x) 3
Transcribed Image Text:c) Suppose you only buy two goods, food (x) and clothing (y), and the government offers you 50 coupons for free food. Each coupon allows you to redeem it at any food store for one unit (such as kilogram) of food. The price of food, Px, is $5 per unit and the price of clothing, Py, is $10 per unit. The government prints your name on the coupon and it requires the store to check your photo ID to ensure your identity. Income is $400. d) Continue with part c): Suppose the government wants to cut administrative costs and would no longer print names on the 50 coupons it gives you. You can sell none, some or all of the coupons in the black market for $3 each. You get cash from selling these coupons. Clothing (4) Clothing (y) 20 20 Go 10 d 1 60 + X 80 100 food (x) food (x) 3
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