Q1 from WS 4: Applications of Consumer Theory and the Labour Supply
Legislators are aware of the need for subsidising day care for families with children. Two proposals are put forward. First, a subsidy of $S could be paid to families for each day a child spends in day care. Second, a lump sum subsidy could be provided for each family with a child registered in day care, regardless of attendance. Members of a trade association of daycare providers lobbt for the first, while a daycare users group lobbies for the second.
i) The minister doesn’t understand why there is no consensus on the best proposal since both programs are designed to cost the government the same amount. Explain why this is so.
Now, its obvious the minister is being retarded because he cannot see the fact that money is going to 2 different people…in the first plan to the childcare and in the second plan to the family and they can choose how they want to spend it…
Here’s the retarded part:
ii) A government economist suggest it is possible to provide a lump sum subsidy that will make families just as well off as under the first proposal but will cost the government less. How could this be done?
It’s not logical to do such a thing…by giving a lump sum subsidy thats less than before, it definitely will lower the indifference curve (families will gain less), but they base it on the fact that all the money would be spent on childcare and give the subsidy based of that fact.
IF YOU REDUCE THE GOD DAMN LUMP SUM, they will BE ABLE TO PURCHASE LESS ITEMS THAN BEFORE! how can that make families as well-off but costing the government less? stop it with your warped logic, and stop trying to make me memorise this warped logic in order to score HDs =(
ok i rant enough already, time to memorise a whole textbook of weird reasoning infront of me.
