1. Business
  2. Economics
  3. the smith family has 1000 per month to spend on...

Question: the smith family has 1000 per month to spend on...

Question details

The Smith family has $1,000 per month to spend on food and other goods. (The two goods are food and dollars spent on all other goods. If you want, just assume that the prices of food and other goods are both $1.) Graph each budget constraint and write the equation. The units for the budget constraint will be dollars spent on food and dollars spent on all other goods. (Note: Some equations or lines may be defined piecewise/have multiple parts. Writing the equations may be trickier so be careful with the graphs first.)

(a) They are given $200 in welfare payments

(b) They are given $200 in food stamps, which cannot be sold.

(c) They are given $100 in food stamps and the option to buy another $100 worth of food stamps at the price of $0.50 per $1 of food stamps. (This was the actual government policy until 1979.)

(d) They are given $200 in food stamps, but each $1 of food stamps can be sold on the black market for $0.50

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution