(2) (All Students-18 Marks). Suppose the Spanish Government subsidises housing expenditures of low-income families by providing...

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(2) (All Students-18 Marks). Suppose the Spanish Government subsidises housing expenditures of low-income families by providing a three dollar-for-dollar subsidy to a family's housing expenditure. The Sanchez family qualify for this subsidy and spend a total of $1,000 per month on housing (they spend $250 of their own and receive a government subsidy of $750). Recently, a new policy has been proposed that would provide each low-income family with a lump sum transfer of $750, which can be used for housing or other goods. Using a graph, demonstrate whether the Sanchez family would prefer the current program, the proposed program or would be indifferent between the two. Explain your results. (2) (All Students-18 Marks). Suppose the Spanish Government subsidises housing expenditures of low-income families by providing a three dollar-for-dollar subsidy to a family's housing expenditure. The Sanchez family qualify for this subsidy and spend a total of $1,000 per month on housing (they spend $250 of their own and receive a government subsidy of $750). Recently, a new policy has been proposed that would provide each low-income family with a lump sum transfer of $750, which can be used for housing or other goods. Using a graph, demonstrate whether the Sanchez family would prefer the current program, the proposed program or would be indifferent between the two. Explain your results.

Answer rating: 100% (QA)

Absolutely Heres how we can graphically analyze the Sanchez familys preference for the housing subsidy vs the lumpsum transfer along with an explanati... View the full answer