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The following figure gives two daily budget constraints for a low-income individual. One budget line is the one in

which the individual, who can work up to 16 hours per day, receives no subsidy from the government. The other budget

line represents participation in an income maintenance program that offers a no-work benefit and phases out this subsidy

as earnings increase. link to graph : http://s725.photobucket.com/user/timsmith1542/media/10947360_1042384752442581_5080346820210097674_o_zpsbjtvkd9z.jpg.html

a)What is the individual's wage rate without program participation?

b)What is the program's no-work benefit? What is the effective wage rate when participating in the program?

c)If, absent the subsidy program, the individual had chosen to work less than 8 hours per day, would she be better off

participating in the program or not participating? Explain, using a diagram if needed.

d)If, absent the subsidy program, the individual had chosen to work more than 8 hours per day, would she be better off

participating in the program or not participating? Explain, using a diagram if needed.

e)What will be the labor supply response for an individual who had chosen to work 8 hours before the program is

implemented and now qualifies for the program? Explain, using a diagram if needed

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Raushan Raj
Raushan RajLv8
28 Sep 2019

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Related questions

1.Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Select one: a. 75-80 % b. 40-50 % c. 20-30 % d. 10-20 %

2.Suppose there are 100 million in the labor force, and 6 million unemployed people.

During the next month, 200,000 people lose their jobs and 300,000 find jobs. The new total of employed is ________ and the new unemployment rate is ________.

Select one:

a. 100.1 million; 5.8 percent.

b. 93.9 million; 6.1 percent.

c. 94.1 million; 5.9 percent.

d. 100 million; 6.1 percent.

3.In a small country, the adult population equals 10,000. There are 3,000 people unemployed and 4,000 people are employed. The labor force participation rate equals

Select one:

a. 70 percent.

b. 40 percent.

c. 57 percent.

d. an undetermined amount given the lack of information.

4.The population of individuals at least 16 years of age can be broken into 3 groups. They are

Select one:

a. those working in the for-profit sector, those working in the nonprofit sector, and unemployed individuals.

b. the unemployed, discouraged workers, and retirees.

c. those employed full-time, those employed only part-time, and the unemployed.

d. None of these.

5.During the Great Depression,

Select one:

An a. most people who couldn't find work left the labor force, so the official unemployment rate remained low.

b. the U.S. unemployment rate reached its historical highest.

c. unemployment statistics were not collected.

d. the unemployment rate was not unusually high, but wage levels were low.

6.The term "market basket" means a

Select one:

a. collection of goods that changes every year and is defined by Congress.

b. collection of goods that can fit into an average shopping cart.

c. collection of goods that is used by a typical family.

d. collection of goods that are purchased during the holiday season.

7.A price index is the

Select one:

a. cost of a market basket of goods today.

b. cost of a market basket of goods and services a year ago is expressed as a percentage of the cost of the same market basket today.

c. year that is chosen as the point of reference for comparison of prices in other years.

d. cost of a market basket of goods and services today expressed as a percentage of the cost of the same market basket during a base year.

8.Which of the following does NOT cause a rightward shift in the supply curve?

Select one:

a. a reduction in resource costs

b. an increase in technology

c. a reduction in the expected future price of the good

d. a reduction in the price of the good

9.Which of the following is a possible outcome of setting a legal maximum rental rate below the market-clearing rental rate?

Select one:

a. a decrease in the quantity of rental housing demanded

b. an increase in the quantity of rental housing supply

c. a black market in rental housing

d. a surplus of rental housing

10.Rent controls primarily benefit

Select one:

a. people looking for rental units.

b. builders.

c. property owners.

d. people who already occupy rental units.

11.Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market-clearing price?

Select one:

a. Consumers, who purchase more units of the product than they did before the price support program was implemented

b. Taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place

c. The government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program

d. Producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues

Question 3 Jennifer is a single mother oered a job at $15/hour. She has $100 of non-labor income per week (obtained via child support).

a. Jennifer's mother watches the baby for free while she works. What is Jennifer's total weekly income if she works 20 hours/week?

b. As Jennifer's baby gets older (and more mobile), the baby is too much for Jennifer's mother to take care of during the day. As a result, Jennifer must now use market childcare, costing $25/week in xed costs (transportation costs) and $10/hour in variable costs. How many hours must Jennifer now work to obtain the same total weekly income as before when she had access to free childcare?

c. If the childcare center does not allow one to pay by the hour, but instead requires one to pay for full-time care (40 hours/week) in order to have access to any care, what will Jennifer's income be (assuming the same xed and per hour cost of care as in (b) if she (i) decides not to work at all and (ii) increases her labor supply to 40 hours/week?

Jennifer is a single mother offered a job at $15/hour. She has $100 of non-labor income per week (obtained via child support).

a. Jennifer’s mother watches the baby for free while she works. What is Jennifer’s total weekly income if she works 20 hours/week?

b. As Jennifer’s baby gets older (and more mobile), the baby is too much for Jennifer’s mother to take care of during the day. As a result, Jennifer must now use market childcare, costing $25/week in fixed costs (transportation costs) and $10/hour in variable costs. How many hours must Jennifer now work to obtain the same total weekly income as before when she had access to free childcare?

c. If the childcare center does not allow one to pay by the hour, but instead requires one to pay for full-time care (40 hours/week) in order to have access to any care, what will Jennifer’s income be (assuming the same fixed and per hour cost of care as in (b) if she (i) decides not to work at all and (ii) increases her labor supply to 40 hours/week?

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