The Pakistani-American Association wants to give Ismail a small prize for an essay he wrote. They are trying to decide between awarding him a $200 voucher for school supplies, and awarding him $200 cash.
Suppose, were he not to receive the prize, Ismail would spend $300 on school supplies and $900 on other goods this semester. (These are the only goods he can buy.)
Now suppose, were he not to receive the prize, Ismail would spend $100 on school supplies and $1100 on other goods this semester. How will Ismail's consumption bundle differ if he is given a $200 voucher redeemable only for school supplies, relative to being given $200 cash?
a Ismail will consume more school supplies and more other goods
b Ismail will consume more school supplies and less other goods
c Ismail will consume the same amount of school supplies and more other goods
d Ismail will consume the same amount of school supplies and the same amount of other goods
e The answer is ambiguous
f The answer is unambiguous, but is not listed above