Tut8 - by the poor families? Why? (b) How do parents who do...

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Economics 290: Canadian Microeconomic Policy Tutorial #8 (Week of July 2) 1. Suppose low-income people are given vouchers worth $200 per month that they can use only to pay rent on housing. Use indifference curve analysis to show how a person could be made at least as well off with a $200 cash transfer. Would the consumer’s choice of the amount of housing to rent be any different if he receives cash instead of vouchers? 2. Government is considering the following two options to give childcare subsidies to poor parents: (1) write a check (cash subsidy), and (2) subsidize the hourly rate that a poor family pays for daycare (per-unit subsidy). (a) If both programs are equally costly to the government, which program is preferred
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Unformatted text preview: by the poor families? Why? (b) How do parents who do not receive subsidies feel about these two programs? Do they prefer one over another? (c) If both programs leave the poor parents equally as well off, which program is more costly to the government? Explain. (d) Under what circumstance recipients prefer in-kind subsidy to a comparable amount of cash subsidy? Why does the government give the poor families in-kind subsidy (such as food stamp) rather than a comparable amount of cash? 3. Public medicare program provides free medical benefits to Canadians. Show the effect of medicare program on consumption of medical services, as well as the excess burden of the medicare subsidy....
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