What happens to the budget constraint of the recipient when he receives the $100 cash under Plan A? What is likely to happen to his consumption of both food and "all other goods" if they are both normal goods?
What will be an ideal response?
The budget constraint will shift out and to the right under the cash plan. His consumption of both goods are likely to rise if they are normal goods.
You might also like to view...
John's utility of wealth curve is shown in the above figure. He currently has total wealth of $20,000. If there is a 50 percent chance that his $10,000 car will be stolen, then his expected wealth equals
A) $0. B) $10,000. C) $15,000. D) $20,000.
Control of a scarce resource or input can serve as an entry barrier
a. True b. False Indicate whether the statement is true or false
A fall in the domestic interest rate leads to capital
a. outflows and exchange rate appreciation. b. outflows and exchange rate depreciation. c. inflows and exchange rate depreciation. d. inflows and exchange rate appreciation.
To maximize profits, a perfectly competitive firm should do all the following except:
A. produce until marginal cost equals price. B. produce until per-unit profits are maximized. C. produce until marginal revenue equals marginal cost. D. produce until economic profits are maximized.