Your city government is considering two policy options to help lower the cost of broadband internet for residents.

The first option involves providing a $50 voucher each month to each family. This voucher can only be used for buying broadband internet.

The second option involves subsidizing broadband internet by 50% (meaning, a plan that earlier cost, say, $100 will now cost $50).

You have a family income of $500 (per month). Which policy option would you prefer in each of the scenarios below and why? (Hint: refer to the food voucher problem we discussed in class. Think in terms of how much of the income is left for other goods in each case)

1. Your monthly expense on broadband internet is $60 (basic plan).
2. Your monthly expense on broadband internet is $100 (faster plan).
3. Your monthly expense on broadband internet is $120 (fastest plan)

Answer rating: 100% (QA)

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