This is the entire question***
Medicaid is an in-kind transfer program that provides healthservices to low-income families. Suppose that government provides alow-income family with $100 worth of Medicaid benefits per month.Furthermore, assume that the family has $500 dollars of income permonth that can be spent on health services, H, or all other goods,X. For simplicity, assume the price of H and X are both $1.
Question 18. Create a diagram that illustrates the family’sbudget constraint without Medicare and the family’s budgetconstraint with Medicare. Label the intercepts and add indifferencecurves to indicate the optimal level of health services with andwithout and Medicare.
Now consider two types of families.
One family is very healthy and consumes very little health careservices. The other family is very sick and consumes a significantamount of health care services. If the Medicare program wasreplaced with an unrestricted cash grant of $100 per month, howwould the welfare of each family be affected? Illustrate youranswer using two diagrams, one for the healthy family and one forthe sick family.
