This question concerns rent subsidies. Suppose that under a rent subsidy the government will pay some specified proportion of the total rental price. Using an indifference map for "housing" (e.g. rooms of standard quality) and "all other commodities" analyze whether this approach to enhancing domestic welfare is more or less effective than granting income tax reductions equal in dollar amount to the amount of the rent subsidy? How do these compare to a lump sum $250 per month subsidy which must be applied toward rent or it is taken away?
This question concerns rent subsidies. Suppose that under a rent subsidy the government will pay some specified proportion of the total rental price. Using an indifference map for "housing" (e.g. rooms of standard quality) and "all other commodities" analyze whether this approach to enhancing domestic welfare is more or less effective than granting income tax reductions equal in dollar amount to the amount of the rent subsidy? How do these compare to a lump sum $250 per month subsidy which must be applied toward rent or it is taken away?
An indifference curve shows the different combinations of two goods or services that give the consumer the same satisfaction level and the consumer is indifferent between different consuming the different bundles.
A budget line shows the different combinations of two goods and services that the consumer can afford with their given income at the prevailing prices.
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