Hi, in a past paper of my "Int

timer Asked: Jan 16th, 2016

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Hi, in a past paper of my "Introductory Microeconomics" unit I found the following question:

The government of Ruritania wishes to raise the income of its sole citizen. The citizen possesses an endowment income of m and consumes two goods, (x_1,x_2), which are sold at exogenous prices (p_1,p_2). Two schemes are being considered: (i) A per-unit subsidy of s<p_1 on each unit x_1 purchased; (ii) An income supplement. Which scheme would the citizen prefer if the government wished to raise the citizen's income by the same amount? Explain.

Could anyone provide me with the answer and explanation because I'm really stuck. ( It is probably related to consumer theory, budget constraint and indifference curves) 

Thank you in advance.

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