Home » Online Course » Figure 5-3 shows a family’s preferences for housing and other goods. Suppose the government offered public housing that provided exactly B0 units of housing services to a low-income family. The public housing unit:

Figure 5-3 shows a family’s preferences for housing and other goods. Suppose the government offered public housing that provided exactly B0 units of housing services to a low-income family. The public housing unit:

increases the level of housing consumption by the same amount as an equal-sized cash transfer.

causes the family to consume less housing than before the fixed-quantity subsidy.

is provided by the government at a cost of $TB.

allows the family to reach a higher indifference curve but causes the family to consume more housing than an equal-sized cash transfer.

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