4 Under a welfare plan, poor people are given a lump-sum payment of $L. If they acceptthis welfare payment, they must pay a high tax, v = 0.5, on anything they earn. If they donot accept the welfare payment, they do not have to pay a tax on their earnings. Showthat whether an individual accepts welfare depends on the individual's tastes.Time constraintThe budget constraint with the welfare plan LW and the budget constraint without thewelfare plan L' are illustrated in the figure to the right.WFor completing the following, assume the indifference curves satisfy the usualassumptions.1.) Use the 3-point curved line drawing tool to graph an indifference curve for anindividual whose equilibrium consumption bundle includes accepting the welfare plan.Label this curve 'IW.2.) Use the 3-point curved line drawing tool to draw an indifference curve for an individualwhose equilibrium consotion bundle does not include accepting the welfare plan.Label this curve 'l'......Y, Goods per day

If an individual has a higher preference for leisure, then he will accept the welfare payment. On…

Answered: Under a welfare plan, poor people are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider your decision about how many hours towork.a. Draw your budget constraint assuming thatyou pay no taxes on your income. On the samediagram, draw another budget constraintassuming that you pay a 15 percent income tax.b. Show how the tax might lead you to work morehours, fewer hours, or the same number of hours.Explain.
Consider a worker who earns $20/hour in the labor market and receives $50 per week innon-labor income. Assume the total number of hours available for work (h) and leisure(L) is 168 hours per week (i.e., ? = 168 = ℎ + ?). a. Draw the budget constraint for this individual. Label the endowment point. b. What is the maximum value of consumption that this individual could achieve ina week? c. In the United States, the Fair Labor Standards Act requires workers to be paid 1.5times their usual hourly wage for “overtime” work, defined as work in excess of40 hours in a week. If this law applies to the worker described above, how does itchange the budget constraint? d. Now suppose Congress passes an income tax. The income tax applies to labor andnon-labor income. The Fair Labor Standard Act is still in effect. The first $1,000in weekly income is exempt from the tax. However, every dollar above $1,000 istaxed at a rate of 10%. (To be clear: the tax on $1,000 in income is 0, the tax on$1,001 is…
Sameena works as a free-lance worker at a software house in Rawalpindi. Supposeshe keeps awake for 110 hours a week. Also suppose that part of this time she canspend on earning money doing this job and using it for her consumption, and the restof the time she can spend on her leisure not earning money. At first she earns Rs.550for every hour she works. Draw a figure showing Saima’s budget constraint, herindifference curve for consumption and leisure and her optimum.
ASAP Consider an income guarantee program with an income guarantess of $6000 and a benefit reductions rate of %50. A person can work up to 2000 hours per year $8 per hour. a. Draw the person’s budget constraint with the income guarantee. b. Suppose that the income gurantee rises to $9000 but with a 75% reduction rate. Draw the new budget constraint. c. Which of these two income guarantee programs is more likely to discourage Work? Explain.
Why tY not substituted for T?
A worker receives a wage rate w and has L hours of leisure every day (the total endowment of hours is 24 hours per day). The government gives a subsidy of rate S of his income. The worker spends all his income. 1. Write a budget constraint of this individual and plot it. 2. Display graphically what is the optimal consumption-leisure choice for this worker. 3. Imagine that instead, the government imposes income tax at rate T. What is the new budget constraint? Display on the same picture. In the new optimum is the consumption higher? Explain the answer in terms of wealth and substitution effects.
c.If your goal is to eliminate target the welfare of the "average person", what sort of welfare function would you use?
Interest Rate 0 Multiple Choice A BC Quantity Refer to the diagram. Suppose that the demand for loanable funds is D₁ and the supply of loanable funds initially is St. If the demand for loanable funds Increases to Do, the equilibrium interest rate will Multiple Choice O increase from E to F. upply of loly. Refer to the diagram. Suppose that the demand for loanable funds is D₁ and the supply of loanable funds initially is St. If the demand for loanable funds increases to Do, the equilibrium interest rate will increase from E to F increase from F to G. Do decrease from G to F. D₁ increase from A to B
Consider food stamps where the government gives a person $200 worth of food stamps that provide a 50% discount on food bought. With $200 of these food stamps, the person can used the food stamps to buy $200 of food for $100 cash. After his food stamps are exhausted, the person can continue to buy food but must pay full price in cash. All Other Goods A Food O The blue budget line shows before getting food stamps. The green budget line is after getting food stamps. O The red budget line is after getting food stamps. O Moving from D to B, the person is using food stamps to buy food. O From C to A, the person is using food stamps to buy food. O At point A, all the food stamps are used. O At point A, the person is consuming 100 units of food and spending the rest of his money on other goods.
Consider an income guarantee program with an income guarantee of $5,000 and a benefit reduction rate of 40%. A person can work up to 2,000 hours per year at $10 per hour. a. Draw the person’s budget constraint with the income guarantee. b. Suppose that the income guarantee rises to $7,500 but with a 60% reduction rate. Draw the new budget constraint c. Which of these two income guarantee programs is more likely to discourage work? Explain. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
No written by hand solution Consider an income guarantee program with an income guarantee of $5,000 and a benefit reduction rate of 40%. A person can work up to 2,000 hours per year at $10 per hour. a. Draw the person’s budget constraint with the income guarantee. b. Suppose that the income guarantee rises to $7,500 but with a 60% reduction rate. Draw the new budget constraint c. Which of these two income guarantee programs is more likely to discourage work? Explain.
In the figure below, which represents how the labor/leisure choice of a consumer changes when the wage rate increases to w' > w, the substitution effect is zero and the overall income effect is positive (in the figure, x represent the amount of leisure). A. True B. False motivate it with a short comment (max 4 lines). 24w' Py (w' > w) 24w C Py A = B BLa L 24

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