Suppose that the federal government's welfare program pays $5,000 for the first five months of earnings, and 50% reduction thereafter. If this worker earns 2,000 dollars per month, assuming 12 months per year, answer the questions. a. Construct the yearly income-leisure constraint both graphically and equations. b. Compute the break-even level of income and leisure (the level of income that makes the welfare = 0). c. Compute the level of income when the leisure is 8 months. What is amount of earning income and what is the amount of welfare benefit?

Suppose that the federal government's welfare program pays $5,000 for the first five months of earnings, and 50% reduction thereafter. If this worker earns 2,000 dollars per month, assuming 12 months per year, answer the questions. a. Construct the yearly income-leisure constraint both graphically and equations. b. Compute the break-even level of income and leisure (the level of income that makes the welfare = 0). c. Compute the level of income when the leisure is 8 months. What is amount of earning income and what is the amount of welfare benefit?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.2P

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