Education vouchers are increasingly used in various parts of the United States. Suppose that the government offers poor people a $5,000 education voucher, which can be used only to pay for education. Doreen would be better off with $5,000 in cash than with the education voucher. In a graph, determine the cash value, V, Doreen places on the education voucher (that is, the amount of cash that would leave her as well off as with the education voucher). Show how much education and "all other goods" she would consume with the education voucher or with a cash payment of V. Suppose Doreen's initial budget line is L1. With the education voucher, her budget line becomes L2, which has a kink. 1.) Use the point drawing tool to identify how much education and all other goods Doreen consumes prior to the education voucher. Label this point 'e,'. 2.) Use the point drawing tool to identify how much education and all other goods Doreen consumes with the education voucher. Label this point 'ez'. Carefully follow the instructions above and only draw the required objects. Suppose line L3 is parallel to budget line L'. Also, let the price of a unit of all other consumption be $1.00. The cash value, V, that Doreen places on the education voucher (in terms of the various values of Y) is v=] (Propenty format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the_ character.)
Education vouchers are increasingly used in various parts of the United States. Suppose that the government offers poor people a $5,000 education voucher, which can be used only to pay for education. Doreen would be better off with $5,000 in cash than with the education voucher. In a graph, determine the cash value, V, Doreen places on the education voucher (that is, the amount of cash that would leave her as well off as with the education voucher). Show how much education and "all other goods" she would consume with the education voucher or with a cash payment of V. Suppose Doreen's initial budget line is L1. With the education voucher, her budget line becomes L2, which has a kink. 1.) Use the point drawing tool to identify how much education and all other goods Doreen consumes prior to the education voucher. Label this point 'e,'. 2.) Use the point drawing tool to identify how much education and all other goods Doreen consumes with the education voucher. Label this point 'ez'. Carefully follow the instructions above and only draw the required objects. Suppose line L3 is parallel to budget line L'. Also, let the price of a unit of all other consumption be $1.00. The cash value, V, that Doreen places on the education voucher (in terms of the various values of Y) is v=] (Propenty format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the_ character.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Education vouchers are increasingly used in various parts of the United States. Suppose that
people a $5,000 education voucher, which can be used only to pay for education. Doreen would be better off with $5,000
in cash than with the education voucher. In a graph, determine the cash value, V, Doreen places on the education
voucher (that is, the amount of cash that would leave her as well off as with the education voucher). Show how much
education and "all other goods" she would consume with the education voucher or with a cash payment of V.
government offers poor
Suppose Doreen's initial budget line is L'. With the education voucher, her budget line becomes L, which has a kink.
1.) Use the point drawing fool to identify how much education and all other goods Doreen consumes prior to the
education voucher. Label this point 'e,"
2.) Use the point drawing tool to identify how much education and all other goods Doreen consumes with the education
voucher. Label this point 'e,'
12
Q Unils of education
All other gooda
Carefully follow the instructions above and only draw the required objects.
Suppose line L is parallel to budget line L'. Also, let the price of a unit of all other consumption be $1.00.
The cash value, V, that Doreen places on the education voucher (in terms of the various values of Y) is
Yo
V= |: (Propenty format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g.
Y-
a subscript can be created with the_ character.)
Y.
Q, Q2
Q, Units of education
-- ----
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