Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
Chapter 15, Problem 46P

Susan is a single mother with three children. She can earn \$ 8 per hour and works up to 2 , 000 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling \$ 16 , 000 per year. For every \$ 1 of income she earns, her level of government support will be reduced by \$ 1 .

Create a table, patterned after Table 15.3. The first column should show Susan’s choices of how many hours to work per year, up to 2 , 000 home. The second column should show her earnings from work. The third column should show her level of government support, given her earnings. The final column should show her total income, combining earnings and government support.

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Please answer 1, 2, and 3! Susan is a single mother with three children. She can earn \$8 per hour and works up to 2,000 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling \$16,000 per year. For every \$1 of income she earns, her level of government support will be reduced by \$1. The table below is patterned after Table 15.8 from the text.   Number of Work Hours Earnings from Work Government Benefits Total Income 2000 \$16,000 \$0 \$16,000 1600     \$16,000 1200     \$16,000 800     \$16,000 400 \$3200 \$12,800 \$16,000 0 \$0 \$16,000 \$16,000   Complete the table. Is this program an example of a poverty trap? Explain your answer. If this program is an example of a poverty trap, how can this program be altered to avoid this problem?
Polly, Molly, and Dolly are all single mothers. They each can earn \$10 per hour working for up to 2,000 hours per year. Their government runs a welfare system that gives income benefits of \$5,000 per year for single mothers with no income. The welfare benefits are reduced by \$1 for every \$2 in earned income. Currently, the government also provides free health care for children of single mothers with less than \$25,000 in income. Each mother values this benefit at \$2,000 per year. Under this system, Polly works 200 hours per year, Molly works 1,025 hours per year, and Dolly works 1,500 hours, so only Polly receives welfare. b. Draw a representative indifference curve for each mother. Discuss how the welfare program changes the behavior of these three individuals. d. The government decides to remove the welfare lock by providing free low- quality public health care (Ho-\$2,000) for everyone. If the individuals want to consumer health care more than Ho, they have to turn to private health…
Susan is a single mother with three children. She is a cashier at a food market earning \$7.75 per hour and works up to 2,000 hours per year. She is eligible for government benefits, so if she does not earn any income, she will receive a total of \$17,050 per year. She can work and still receive government benefits, but for every \$1 of income, her government stipend is \$1 less.  The government has decided to change the benefits policy of every \$1 of income earned to reduce the government’s stipend by 60 cents. How will this change Susan's benefits received? What are her new choices? Complete the Revised Poverty Trap Table to present Susan’s options and provide answers to the following: What are the advantages of Susan working? What are the disadvantages of Susan working? What are the advantages of Susan receiving government benefits? What are the disadvantages of Susan receiving government benefits? Based on your findings from the Poverty Trap Table, should Susan continue to work or…
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