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Question: 3 consider a world with one and only one type...

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3. Consider a world with one and only one type of food, called good 1, and a second non-food good called good 2. In an effort to prevent malnourishment, the government subsidizes food consumption up to a lower bound xL 〉 0: this is a per unit subsidy that reduces the unit price of food by 50% up to this amount. In an effort to reduce health costs, the government taxes food consumption above an upper bound xH XL: this is a per unit tax that increases the unit price of additional food over and above this amount by 50%. Graph the budget set for the special case in which pi -p2-1, m - 10, xL - rH -5 and explain your derivation (much as I did in class 2, and

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