The graph below shows the budget constraint between income and leisure for an individual. For every hour spent in leisure,one less hour is spent working and vice versa. Move the Government Support line to illustrate a situation in which theindividual starts making an income higher than the government support income when he/she works more than 1,000hours.Provide your answer below:30000(0, 27 500)25000-20000Government Support ($17000)15000100005000-(3000, 0)100020003000Leisure (Hours)4000Income ($)

Answered: The graph below shows the budget…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter15: Income Inequality And Poverty

Section: Chapter Questions

Problem 15CQ

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Question

The graph below shows the budget constraint between income and leisure for an individual. For every hour spent in leisure,
one less hour is spent working and vice versa. Move the Government Support line to illustrate a situation in which the
individual starts making an income higher than the government support income when he/she works more than 1,000
hours.
Provide your answer below:
30000
(0, 27 500)
25000-
20000
Government Support ($17000)
15000
10000
5000-
(3000, 0)
1000
2000
3000
Leisure (Hours)
4000
Income ($)

Expert Solution

Step 1

A consumer's budget constraint is the sum of all combinations of products and services that they can afford given current pricing and their allotted income. Using a budget constraint and a preference map, consumer theory examines the parameters of consumer choices. In the two-good case, both notions are represented graphically. Consumers are bound by their budget because they can only buy so much as their income allows. Budget constraints are expressed as a display style $P_{x}x+P_{y}y=m$ P x is the price of good X, P y is the price of good Y, and m is the amount of income.

$P_{x}x+P_{y}y=m$

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