The Food Stamp Program (FSP) was officially established by the 1964 Food Stamp Act to provide adequate nutrition tolow-income households-those living in poverty. It has since become one of the largest government transfer programs in400-the United States, currently serving roughly 20 million participants at an annual cost in 2004 to the federal government of23.8 billion dollars. That same year, program participants received an average of $83.92 in monthly Food Stamp benefits.350-Suppose Jessica's income is $250 a month, which she spends on food and other consumption. Let the price of food andthe price of other consumption each be $1 per unit. Draw her budget line. If she receives $50 in Food Stamps, how doesher budget line change?300-250To illustrate, first graph Jessica's budget line without Food Stamps using the line drawing tool (L,). Attach the appropriateE 200-provided label. Locate the line by finding its vertical and horizontal intercepts.150-Now suppose Jessica's income is supplemented with $50 in Food Stamps. Suppose she spends all her cash onnon-food consumption. Then Jessica consumes at the vertical intercept of her original budget line. Is it possible forJessica to increase her non-food consumption beyond this point? Jessica, however, can use some or all of her FoodStamps to add food consumption. Ask yourself: What is the maximum amount of food that she can get with FoodStamps? The resulting consumption bundle lies on the new budget line. Starting at the point you've found, Jessica coulduse some of her cash to by even more food. This movement traces out the rest of her budget line with Food Stamps.100-50-350 400150 200 250 30050100With this information, draw the budget line with Food Stamps using the line drawing tool. This new budget constraint willhave two line segments (L2 sament 1 and L2 senment 2). Label each of them.Food per monthIf you are not prompted for a label, then you have used the wrong drawing tool.Non-food consumption per month

Question
Asked Oct 16, 2019
The Food Stamp Program (FSP) was officially established by the 1964 Food Stamp Act to provide adequate nutrition to
low-income households-those living in poverty. It has since become one of the largest government transfer programs in
400-
the United States, currently serving roughly 20 million participants at an annual cost in 2004 to the federal government of
23.8 billion dollars. That same year, program participants received an average of $83.92 in monthly Food Stamp benefits.
350-
Suppose Jessica's income is $250 a month, which she spends on food and other consumption. Let the price of food and
the price of other consumption each be $1 per unit. Draw her budget line. If she receives $50 in Food Stamps, how does
her budget line change?
300-
250
To illustrate, first graph Jessica's budget line without Food Stamps using the line drawing tool (L,). Attach the appropriate
E 200-
provided label. Locate the line by finding its vertical and horizontal intercepts.
150-
Now suppose Jessica's income is supplemented with $50 in Food Stamps. Suppose she spends all her cash on
non-food consumption. Then Jessica consumes at the vertical intercept of her original budget line. Is it possible for
Jessica to increase her non-food consumption beyond this point? Jessica, however, can use some or all of her Food
Stamps to add food consumption. Ask yourself: What is the maximum amount of food that she can get with Food
Stamps? The resulting consumption bundle lies on the new budget line. Starting at the point you've found, Jessica could
use some of her cash to by even more food. This movement traces out the rest of her budget line with Food Stamps.
100-
50-
350 400
150 200 250 300
50
100
With this information, draw the budget line with Food Stamps using the line drawing tool. This new budget constraint will
have two line segments (L2 sament 1 and L2 senment 2). Label each of them.
Food per month
If you are not prompted for a label, then you have used the wrong drawing tool.
Non-food consumption per month
help_outline

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The Food Stamp Program (FSP) was officially established by the 1964 Food Stamp Act to provide adequate nutrition to low-income households-those living in poverty. It has since become one of the largest government transfer programs in 400- the United States, currently serving roughly 20 million participants at an annual cost in 2004 to the federal government of 23.8 billion dollars. That same year, program participants received an average of $83.92 in monthly Food Stamp benefits. 350- Suppose Jessica's income is $250 a month, which she spends on food and other consumption. Let the price of food and the price of other consumption each be $1 per unit. Draw her budget line. If she receives $50 in Food Stamps, how does her budget line change? 300- 250 To illustrate, first graph Jessica's budget line without Food Stamps using the line drawing tool (L,). Attach the appropriate E 200- provided label. Locate the line by finding its vertical and horizontal intercepts. 150- Now suppose Jessica's income is supplemented with $50 in Food Stamps. Suppose she spends all her cash on non-food consumption. Then Jessica consumes at the vertical intercept of her original budget line. Is it possible for Jessica to increase her non-food consumption beyond this point? Jessica, however, can use some or all of her Food Stamps to add food consumption. Ask yourself: What is the maximum amount of food that she can get with Food Stamps? The resulting consumption bundle lies on the new budget line. Starting at the point you've found, Jessica could use some of her cash to by even more food. This movement traces out the rest of her budget line with Food Stamps. 100- 50- 350 400 150 200 250 300 50 100 With this information, draw the budget line with Food Stamps using the line drawing tool. This new budget constraint will have two line segments (L2 sament 1 and L2 senment 2). Label each of them. Food per month If you are not prompted for a label, then you have used the wrong drawing tool. Non-food consumption per month

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check_circleExpert Solution
Step 1

Jessica’s income per month is given to be $250.

Also, prices of food and non-food consumption is $1 per unit. If food stamp is not provided, she will have only $250 for consumption of both goods. The budget constraint thus formed is shown below:

Expenditure on goods + Expenditure on other goods = $250

This shows the intercepts of the budget line. If she consumes only food products, she can consume 250 units. Similar is the case for other items.

Step 2

If she gets $50 in food stamp benefits. She now has $300 for food consumption in case she spends all her income on food. Hence, in this case, her intercept for food consumption axis is $300.

Both the cases can be shown on the follow...

Other goods
L
-250
-200
L2 segment 2
150
L1
-100
50
100
150
200
250
Food consumption
help_outline

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Other goods L -250 -200 L2 segment 2 150 L1 -100 50 100 150 200 250 Food consumption

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