Question: 8. We consider the effect of the Food stamp program on the budget set. Consider the amount of money spent on food on the horizontal

8. We consider the effect of the Food stamp program on the budget set. Consider the amount of money spent on food on the horizontal axis and expenditures on all other goods on the vertical axis. Since we are measuring each good in terms of money spent on it, the price of each good is automatically 1. The household's income is $100. And the household is allowed to buy $125 of food stamps for 25$, which means that she can pay $1 to receive $5 worth of food. Then, a. The budget line is straight with no kink. b. Before the household spends money on buying $125 food, the budget line has a slope of -5. c. The horizontal intercept of the budget line is $200. d. The vertical intercept of the budget line is $125. e. If the food stamp is simply given to the households, the budget line is the same as the above case

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