Jackie spends her money on food and all other goods. Right now, she has an income of $600 per month. Compare two alternative welfare programs in which she could participate: program A would provide her with a monthly check of $300 and program B would provide her with $400 a month in credits that can be spent only on food.
a. Draw Jackie’s budget constraints in each of these two cases.
b. Draw representative indifference curves that would reflect each of these three scenarios
(i) Jackie prefers program A to program B.
(ii) Jackie prefers program B to program A.
(iii) Jackie is indifferent between the two programs.