Study Materials
1. Textbook Chapter 4 2. Read Lecture Slides 3. Extra Reading
- Cut in Food Stamps Forces Hard Choices on Poor. Link: http://www.nytimes.com/2013/11/08/us/cut-in-food-stamps-forces-hard-choices-on-poor.html?smid=fb-share&_r=0
Some background: In the US almost $40 billion cuts to food stamps were approved by the Republican-controlled House. These cuts are to be phased in over 10 years.
Consider the following questions while you read the above article:
1. As income of poor households fell (i.e. decrease in food stamps) which food items did they forgo (give up) ?
>These would be normal goods – As income falls, demand decreases.
2. As income of poor households fell (i.e. decrease in food stamps) which food items did they substitute for the forgone food? which did they start to purchase?
These would be inferior goods – As income falls, demand increases.
Lecture Slides
