Total grain 10.5 produced What Bruno gets Feasible frontier. Angela and Bruno combined G 5.25 What Angela gets 0 Angela's free time 12 Angela's work 24 Angela's hours of free time If Angela has very flat indifference curves (horizontal), she may prefer Gto the other three allocations If Angela has very steep indifference curves, she may prefer Fto the other three allocations Bushels of grain

Total grain 10.5 produced What Bruno gets Feasible frontier. Angela and Bruno combined G 5.25 What Angela gets 0 Angela's free time 12 Angela's work 24 Angela's hours of free time If Angela has very flat indifference curves (horizontal), she may prefer Gto the other three allocations If Angela has very steep indifference curves, she may prefer Fto the other three allocations Bushels of grain

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.2P

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In the United States, one of the largest welfare programs is the Supplemental NutritionAssistance Program (SNAP)1representing the second largest in-kind transfer programfor individuals in the US. From the abstract of the study we are told “[a] 1% increasein benefits per population raises grocery prices by a persistent 0.08%. A calibratedpartial-equilibrium model implies a marginal benefit dollar raises a recipient’s consumersurplus from groceries by $0.7, producer surplus by $0.5, and lowers each non-SNAPconsumer’s surplus by $0.05.” In other words, increasing the size of the in-kind transferleads to higher prices. This higher price results in a larger surplus for grocery stores anda lower consumer surplus for individuals not participating in SNAP. Those individualswho participate in SNAP can increase their overall consumer surplus as they haveaccess to more goods, despite the higher price. This result is estimated using thenearly 100% redemption of the SNAP benefits (i.e. assuming the…
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