When comparing a cash subsidy and a voucher worth the same dollar amount, but only good for the purchase of a single good:
A)a consumer can never be better off with a cash subsidy than with a voucher.
B)a consumer can never be better off with a voucher than with a cash subsidy.
C)a cash subsidy will always make the consumer better off than the consumer would be with a voucher.
D)a voucher will always make the consumer better off than the consumer would be with a cash subsidy.

Question

Quizplus · Accepted Answer

A voucher restricts the consumer's choices to only one good, limiting their ability to spend the money on any other goods. However, a cash subsidy would provide the consumer with the freedom to spend the money as they see fit, giving them more choices and potentially more utility. Therefore, a consumer can be better off with a cash subsidy than with a voucher. With a voucher, the consumer is restricted to only purchasing a single good, while with a cash subsidy, the consumer can use the money to purchase any good they desire. This gives the consumer more flexibility and potentially allows them to find a better deal or purchase a more necessary good. Therefore, a consumer can potentially be better off with a cash subsidy rather than a voucher.

When Comparing a Cash Subsidy and a Voucher Worth the Same