In the country of Effluvia any consumer can buy a commodity called "Education" at a price of one urk per unit. (An urk is the unit of money in Effluvia) All consumers in Effluvia are rational. For each consumer, Education has the more-is-better property. Every consumer has am income of more than 100 urks.
Now the goverment of Effluvia decides that it wants its citizens to be educated but not too educated. Accordingly, it institutes a voucher scheme. Each consumer is given a voucher which entitles her, free of charge, to fifty units of education. (of course she can also use the voucher to cnosumer, free of charge, less than fifty units) If she wants more than fifty units of education, then she first has to pay a flat fee of fifty urks. After having paid the fee, she can buy a fifty-first unit of education at a price of one, a fifty-second unit at a price of one, and so on, always paying one urk for each additional unit.
(a) Draw two budget lines for the typical consumer. Put urks on the vertical axis and education on the horizontal axis, One budget line should describe the situation before and education on the horizontal axis. One budget line should describe the situatoin before the voucher scheme and the other should describe the situation after the vouche scheme.
(b) Could we see a consumer buying 25 units of education before the voucher scheme is introduced and 120 units after? Explain.