Budget-Constraint-Consumer-Theory
Use a budget constraint line to show what happens when:
a)The government decides to pay off the first kg of butter that each family buys, but a tax is imposed on butter beyond that 1 kg. A family uses butter and the family utility doesn’t change after this action from the government. Find out if the tax on butter paid by the family can be more than the subsidy it receives for the first kg of butter. Justify.
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Order Paper Nowb) Food and clothing dispensers are issued. Payments are made for food and clothes in cash, but also, each product costs a certain number of dispensing points (the state determines the numbers). Each consumer receives a certain amount of points that can be used for any product. Now, the consumer’s income increases (in cash). He buys more food and less clothes than before. Has clothes become inferior good? Justify the answer.
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