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Suppose now that the previous subsidy for schooling is removed, and the government instead institutes a "Free Lunch Program". For each unit of Schooling that an individual purchases, they receive a free unit of Food (for $0). 11. Draw this new budget line for this individual with Schooling on the x-axis and Food on the y-axis. Label the x-intercept, y-intercept, and any kinks for this budget constraint. Call this Budget Constraint 3. [3 points]

Suppose now that the previous subsidy for schooling is removed, and the government instead institutes a "Free Lunch Program". For each unit of Schooling that an individual purchases, they receive a free unit of Food (for $0). 11. Draw this new budget line for this individual with Schooling on the x-axis and Food on the y-axis. Label the x-intercept, y-intercept, and any kinks for this budget constraint. Call this Budget Constraint 3. [3 points]

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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please answer 11 and 12

Suppose that an individual has $400 in total income to spend, and they gain utility from two goods: (i) School (S), and (ii) Food (F). Suppose that the price of Schooling is $40 per unit and the price of Food is $10 per unit. 8. Draw the budget line for this individual with Schooling on the x-axis and Food on the y- axis. Label the x-intercept and y-intercept for this budget constraint. Call this Budget Constraint 1. [2 points] Now suppose that the government decides to subsidize the price of schooling, providing a household with a $20 per unit subsidy for each unit of Schooling consumed up until the 5th unit of Schooling. However, they pay for this by increasing the price of Schooling by $20 for every unit purchased after the 5th unit of Schooling. 9. Draw this new budget line for this individual with Schooling on the x-axis and Food on the y-axis. Label the x-intercept, y-intercept, and any kinks for this budget constraint. Call this Budget Constraint 2. [3 points] 10. What is the slope of Budget Constraint 2 for each section of this budget constraint? Show your work. [1 point] Suppose now that the previous subsidy for schooling is removed, and the government instead institutes a "Free Lunch Program". For each unit of Schooling that an individual purchases, they receive a free unit of Food (for $0). 11. Draw this new budget line for this individual with Schooling on the x-axis and Food on the y-axis. Label the x-intercept, y-intercept, and any kinks for this budget constraint. Call this Budget Constraint 3. [3 points] 12. What is the slope of Budget Constraint 3 for each section of this budget constraint? Show your work. [1 point]
Transcribed Image Text:Suppose that an individual has $400 in total income to spend, and they gain utility from two goods: (i) School (S), and (ii) Food (F). Suppose that the price of Schooling is $40 per unit and the price of Food is $10 per unit. 8. Draw the budget line for this individual with Schooling on the x-axis and Food on the y- axis. Label the x-intercept and y-intercept for this budget constraint. Call this Budget Constraint 1. [2 points] Now suppose that the government decides to subsidize the price of schooling, providing a household with a $20 per unit subsidy for each unit of Schooling consumed up until the 5th unit of Schooling. However, they pay for this by increasing the price of Schooling by $20 for every unit purchased after the 5th unit of Schooling. 9. Draw this new budget line for this individual with Schooling on the x-axis and Food on the y-axis. Label the x-intercept, y-intercept, and any kinks for this budget constraint. Call this Budget Constraint 2. [3 points] 10. What is the slope of Budget Constraint 2 for each section of this budget constraint? Show your work. [1 point] Suppose now that the previous subsidy for schooling is removed, and the government instead institutes a "Free Lunch Program". For each unit of Schooling that an individual purchases, they receive a free unit of Food (for $0). 11. Draw this new budget line for this individual with Schooling on the x-axis and Food on the y-axis. Label the x-intercept, y-intercept, and any kinks for this budget constraint. Call this Budget Constraint 3. [3 points] 12. What is the slope of Budget Constraint 3 for each section of this budget constraint? Show your work. [1 point]
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