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]
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
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]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe030d1c7-f368-43b0-a0f3-53317845dc11%2F6fc5310d-3b37-458f-9763-78cb4bf3d833%2Fq6sfrfgo_processed.png&w=3840&q=75)
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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