The Federal govemment wishes to upgrade water treatment plants and is offering your city $2 for...

Transcribed Image Text:

The Federal govemment wishes to upgrade water treatment plants and is offering your city $2 for every $1 spent on water treatment plants (Y) subject to a maximum of $ 1080. The price of Y is $9 and the price of X is $3. Your income is $900. Carefully draw the new budget line. Give the exact co-ordinates for all relevant points. Y(Water treatment plants) 300 280 2601 240 220 200 180 160 70 140 120 100 80 60 40 20 0 20 40 82 88 94 60 80 100 120 140 160 180 200 220 240 260 280 300 With the conditional grant, how much better off is the city? What is the amount of the grant? X (non water treatment plants) If instead the city were given the same amount without conditions, how much better off would it be compared to the conditional grant? Explain why? At what point are relative prices unaffected. Give the exact coordinates Y and X utils The Federal govemment wishes to upgrade water treatment plants and is offering your city $2 for every $1 spent on water treatment plants (Y) subject to a maximum of $ 1080. The price of Y is $9 and the price of X is $3. Your income is $900. Carefully draw the new budget line. Give the exact co-ordinates for all relevant points. Y(Water treatment plants) 300 280 2601 240 220 200 180 160 70 140 120 100 80 60 40 20 0 20 40 82 88 94 60 80 100 120 140 160 180 200 220 240 260 280 300 With the conditional grant, how much better off is the city? What is the amount of the grant? X (non water treatment plants) If instead the city were given the same amount without conditions, how much better off would it be compared to the conditional grant? Explain why? At what point are relative prices unaffected. Give the exact coordinates Y and X utils