Question: Consider the model of an in kind transfer in Figure

Consider the model of an in- kind transfer in Figure 12.3. Suppose that it is illegal for a recipient of the cheese to sell it. Nevertheless, there is a black market, where cheese can be sold for $ 1 per pound. Show how the existence of the black market affects the individual’s bud-get constraint. Does it make her better off?

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  • CreatedMarch 25, 2015
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