You have $100 to spend on food and clothing. The price of food is $4 and the price of clothing is $10. Graph your budget constraint. Suppose that the government subsidizes food such that each unit of food is half-price, up to the first 10 units of food. Graph your budget constraint in this circumstance. Will you and others be well-off from this subsidy? Use indifference curves on the old and new budget constraints to answer this.

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A:

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