Consider a consumer who is choosing between All Other Goods (AOG) and food. Suppose the market price of AOG is $1 per unit, and the market price of food is $2 per unit. Consider the following recommendations of the Food-Aid Program for a consumer with income equal to $1000. (1) (II) A. B. C. Give the consumer 100 units of food free. Any amount in excess of 100 units will be charged the market price. The first 100 units of food will be charged half the market price and any amount after that will be charged the market price. All units of food are made available to the consumer at half the market price. On the SAME figure, with food on the horizontal axis and AOG on the vertical axis, draw the budget lines corresponding to each program. (Make sure that you show the quantities corresponding to the vertical and horizontal intercepts of the budget line for each program). On this figure, draw the indifference curves of a consumer who has a strong preference for food. Show the utility-maximizing point for each program. Which program is best for this consumer? Which program is worst?

Consider a consumer who is choosing between All Other Goods (AOG) and food. Suppose the market price of AOG is $1 per unit, and the market price of food is $2 per unit. Consider the following recommendations of the Food-Aid Program for a consumer with income equal to $1000. (1) (II) A. B. C. Give the consumer 100 units of food free. Any amount in excess of 100 units will be charged the market price. The first 100 units of food will be charged half the market price and any amount after that will be charged the market price. All units of food are made available to the consumer at half the market price. On the SAME figure, with food on the horizontal axis and AOG on the vertical axis, draw the budget lines corresponding to each program. (Make sure that you show the quantities corresponding to the vertical and horizontal intercepts of the budget line for each program). On this figure, draw the indifference curves of a consumer who has a strong preference for food. Show the utility-maximizing point for each program. Which program is best for this consumer? Which program is worst?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Hello, I am not understanding this practice problem. There isnt no figure missing.

Consider a consumer who is choosing between All Other Goods (AOG) and food. Suppose the
market price of AOG is $1 per unit, and the market price of food is $2 per unit. Consider the
following recommendations of the Food-Aid Program for a consumer with income equal to
$1000.
Give the consumer 100 units of food free. Any amount in excess of 100 units will
be charged the market price.
The first 100 units of food will be charged half the market price and any amount
after that will be charged the market price.
All units of food are made available to the consumer at half the market price.
А.
В.
С.
On the SAME figure, with food on the horizontal axis and AOG on the vertical axis,
draw the budget lines corresponding to each program. (Make sure that you show the
quantities corresponding to the vertical and horizontal intercepts of the budget line for
each program).
(I)
On this figure, draw the indifference curves of a consumer who has a strong preference
for food. Show the utility-maximizing point for each program. Which program is best for
this consumer? Which program is worst?
(II)

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