One type of anti-poverty in-kind support is food stamps (SNAP). Another example is the Children’s Health Insurance Program (CHIP). CHIP is a health insurance program to help lower and middle-income families afford health insurance for their children. It’s targeted at families with too much income (200%-300% of FPL) to quality for Medicaid, the program for the lowest income families. Consider a world with only two goods: health insurance policies and food. You have a family with three children and cannot afford to cover all three of them and still buy enough food (without CHIP).
Show the family’s budget constraint without CHIP and with CHIP. Show what point you would choose for your family in each case.