a) Draw the consumer choice problem. Make sure your graph is clearly labeled.

b) Explain how welfare-consistent monetary poverty lines can be constructed using the above information. Discuss whether they are unique; if not, how might a single line be identified?
 

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Amartya Sen argues that what really matters to peoples' well-being is their attainable functionings-their capabilities. Let there be just two functionings: normal physical activities ("work") and social inclusion ("social"). The attainments of these capabilities for person i are denoted fW and fS (respectively, in obvious notation). Preferences over capabilities can be represented by the utility function, u(fw, f$). Assume further that a person's work capability is determined by the food she consumes (qf) while her social capability depends on clothing consumed (q.). Suppose further that food and clothing can be purchased in any desired quantities at fixed prices, with those prices denoted p, pC respectively. Amartya Sen argues that what really matters to peoples' well-being is their attainable functionings-their capabilities. Let there be just two functionings: normal physical activities ("work") and social inclusion ("social"). The attainments of these capabilities for person i are denoted fW and fS (respectively, in obvious notation). Preferences over capabilities can be represented by the utility function, u(fw, f$). Assume further that a person's work capability is determined by the food she consumes (qf) while her social capability depends on clothing consumed (q.). Suppose further that food and clothing can be purchased in any desired quantities at fixed prices, with those prices denoted p, pC respectively.

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a consumer choice graph below b The poverty line should be welfareconsistent meaning that they are m... View the full answer