President Vladimir Putin of Russia proposed replacing in-kind subsidies such as free public transportation and rent-free apartments for government workers with cash subsidies of between $20 and $120 per month. The proposal led to widespread complaints among Russian citizens that the cash subsidies were not large enough. One reportedly asked, “What is a perk worth?” Use an indifference curve analysis to show how to convert an in-kind subsidy into a cash subsidy that leaves people equally well off.
President Vladimir Putin of Russia proposed replacing in-kind subsidies such as free public transportation and rent-free apartments for government workers with cash subsidies of between $20 and $120 per month. The proposal led to widespread complaints among Russian citizens that the cash subsidies were not large enough. One reportedly asked, “What is a perk worth?” Use an indifference curve analysis to show how to convert an in-kind subsidy into a cash subsidy that leaves people equally well off.
Chapter21: Demand: Consumer Choic
Section: Chapter Questions
Problem 16E
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President Vladimir Putin of Russia proposed replacing in-kind subsidies such as free public transportation and rent-free apartments for government workers with cash subsidies of between $20 and $120 per month. The proposal led to widespread complaints among Russian citizens that the cash subsidies were not large enough. One reportedly asked, “What is a perk worth?”
Use an indifference curve analysis to show how to convert an in-kind subsidy into a cash subsidy that leaves people equally well off.
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