When given a choice between a cash subsidy and a voucher worth the same dollar amount, but only good for the purchase of a single good:
A)the consumer will always prefer the voucher to the cash subsidy or be indifferent between the two.
B)the consumer will always prefer the cash subsidy to the voucher or would be indifferent between the two.
C)the consumer might prefer the cash subsidy to the voucher or might prefer the voucher to the cash subsidy.
D)the consumer would prefer to receive neither the cash subsidy nor the voucher.

Question

Quizplus · Accepted Answer

The consumer will always prefer the cash subsidy to the voucher or would be indifferent between the two because cash offers more flexibility in spending choices compared to a voucher, which is restricted to the purchase of a single good.

When Given a Choice Between a Cash Subsidy and a Voucher