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Consider the model of an in-kind transfer in Figure 123 Suppose that it is illegal for a recipient of the cheese to sell it Nevertheless there is a black market where cheese can be sold for

Consider the model of an in-kind transfer in Figure 12.3. Suppose that it is illegal for a recipient of the cheese to sell it. Nevertheless, there is a black market, where cheese can be sold for $1 per pound. Show how the existence of the black market affects the individual's budget constraint. Does it make her better off?
 

May 22 2020 View more View Less

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