Figure 5-3 shows a family's preferences for housing and other goods.
-Refer to Figure 5-3.Suppose the government offered public housing that provided exactly B0 units of housing services to a low-income family.The public housing unit:
A)is provided by the government at a cost of $TB.
B)allows the family to reach a higher indifference curve but causes the family to consume more housing than an equal-sized cash transfer.
C)increases the level of housing consumption by the same amount as an equal-sized cash transfer.
D)causes the family to consume less housing than before the fixed-quantity subsidy.

Question

Figure 5-3 shows a family's preferences for housing and other goods. 
-Refer to Figure 5-3.Suppose the government offered public housing that provided exactly B0 units of housing services to a low-income family.The public housing unit:
A)is provided by the government at a cost of $TB. 
B)allows the family to reach a higher indifference curve but causes the family to consume more housing than an equal-sized cash transfer. 
C)increases the level of housing consumption by the same amount as an equal-sized cash transfer. 
D)causes the family to consume less housing than before the fixed-quantity subsidy.

Quizplus · Accepted Answer

The Answer of Figure 5-3 shows a family's preferences for housing and other goods. 
-Refer to Figure 5-3.Suppose the government offered public housing that provided exactly B0 units of housing services to a low-income family.The public housing unit:
A)is provided by the government at a cost of $TB. 
B)allows the family to reach a higher indifference curve but causes the family to consume more housing than an equal-sized cash transfer. 
C)increases the level of housing consumption by the same amount as an equal-sized cash transfer. 
D)causes the family to consume less housing than before the fixed-quantity subsidy.

Figure 5-3 Shows a Family's Preferences for Housing and Other