Is a wealthy person more likely than a low-income person to prefer to receive a

Question

Is a wealthy person more likely than a low-income person to prefer to receive a government payment of $100 in cash to $100 worth of food stamps? Why or why not? Relative to a wealthy person, a low-income person is O A. more likely to prefer $100 in food stamps because they are likey to spend less on food O B. more likely to prefer $100 in cash because they are less likely otherwise to spend $100 on food. C. equally likely to prefer $100 in cash because they are likely to spend less on food and on other consumption O D. more likely to prefer $100 in cash because they are more likely otherwise to spend a larger proportion of their income on food OE. more likely to prefer $100 in food stamps because they are more likely to be hungry.

Explanation / Answer

B.) More likely to prefer $100 in cash because they are less likely to spend $100 on food.

Wealthy individuals are likely to spend more than $100 on food, and poor individuals are more likely to spend less than $100 on food (since their limited income must cover other necessities (e.g. housing, medical etc)), then the poor person will prefer the cash over the food stamps.

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