1. Suppose that currently the government provides everyone with a guaranteed income of $10,000 per year, but this benefit level is reduced by $1 for each $1 of work income. The government is considering changing this policy so that the benefit level is reduced by $1 for every $2 of work income. What effect would this policy have on work effort? Explain your answer and include a graph depicting the two scenarios.
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- 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.2. Assume that in the state of Kentucky, Bill is guaranteed S400 of welfare benefits if he does not work at all. They are allowed a disregard of $100 and face a tax rate of 50%. He has a nonlabor income equal to zero and if the works he can carn a wage of $10 per hour. His total time is 200 hours a woek. a. How many hours of leisure is Bill consuming at his break even point? b. Graph the budget constraint, labeling the break even point and other breaks in the curve as well as slopes of each line. Draw Bill's indifference curves such that he chooses to work 5 hours a month.Imagine that the government reworks the welfare policy that was affecting Jonathan in question 1, so that for each dollar someone like Jonathan earns at work, his government benefits diminish by only 30 cents. Reconstruct the table from question 1 to account for this change in policy. Draw Jonathans labor-leisure opportunity sets, both for before this welfare program is enacted and after it is enacted.
- 10) Graphically illustrate the TANF example with a 2,000-hour constraint between work and leisure and a $10 per hour wage rate. Illustrate two cases in the same graph, a guaranteed benefit of $5,000 and $3,000 with a benefit reduction rate of 50% in both cases. Identify the case of Sarah who reduces leisure when the guaranteed benefit is reduced from $5,000 to $3,000.5. Suppose that John could work 365 days per year and could earn $200 per day for each day he worked. a. Draw his budget line with respect to his labor-leisure tradeoff b. Suppose that John chooses to work 200 days per year. Draw the appropriate indifference curve, and not his equilibrium wage income and labor-leisure choices c. Suppose that John’s wage rises to $210 per day. Show how his equilibrium level of income and labor-leisure will change. d. Suppose John is ill ten days per year. Draw the impact of this illness on the equilibrium above. How will it change his equilibrium allocation of earnings and labor vs. leisure?JosephmigratedtoCanadafromGhana5yearsago.Hecurrently works in sales but is considering quitting work for two years to earn an MBA degree. His current job pays $40,000 per year (after taxes), but he could earn $55,000 per year (after taxes) if he had an MBA. Tuition is $10,000 per year, and the cost of an apartment near campus is equal to the $10,000 he is currently paying. His discount rate is 6 percent per year. He just turned 48 and plans to retire when he turns 60, whether or not he earns his MBA degree. Based on this information, should he go for an MBA degree? Explain carefully with appropriate calculations.
- Question 2 of 5 Y 10 9 8 7 6 5 4 3 2 1 0 0 1 2 3 4 5 6 7 8 9 10 l total income per day. Consider the figure above and suppose the person has 7 hours per day to divide between labour and non-labour activities. A. If non-labour income is $0.50 per day, this individual will choose hours of work and will have $ hours instead and enjoy hours of leisure. Their income from labour will be $ B. If non-labour income increases to $2, they will work C. Comparing parts A and B above, the income elasticity of this person's labour is equal to hours of leisure. Their total income per day will now be $ (round to two decimal places) which is (elastic/inelastic). Now (ignoring the figure above) suppose aggregate labour supply is measured as aggregate number of hours worked (L) given wage (w). A. Graph the labour supply if L=5w. The (total) elasticity of labour supply is B. Graph the labour supply if L. = 14w. The (total) clasticity of labour supply is per day and theyIn recent years, unemployment rates in several European countries have been higher than unemployment rates in the United States. Many economists believe that European unemployment rates have been higher because O unemployment benefits are more generous in Europe than in the United States. O of the different methods used to measure unemployment. If similar methods were used, unemployment rates in Europe and the United States would be about the same. O European firms hire many seasonal workers from other countries, and this tends to inflate unemployment rates in their countries. O the size of the military is much larger in the United States and all military personnel are classified as employed.Suppose that Congress passes a law requiringemployers to provide employees some benefit (suchas healthcare) that raises the cost of an employee by$4 per hour.a. What effect does this employer mandate haveon the demand for labor? (In answering this andthe following questions, be quantitative whenyou can.)b. If employees place a value on this benefit exactlyequal to its cost, what effect does this employermandate have on the supply of labor?c. If the wage can freely adjust to balance supply anddemand, how does this law affect the wage andthe level of employment? Are employers better orworse off? Are employees better or worse off?d. Suppose that, before the mandate, the wage in thismarket was $3 above the minimum wage. In thiscase, how does the employer mandate affect thewage, the level of employment, and the level ofunemployment?e. Now suppose that workers do not value themandated benefit at all. How does this alternativeassumption change your answers to parts(b) and (c)?
- 1. A consumer has ·100 hours of time to allocate to either labor or leisure·A real wage w=50·Dividends income of 500·Taxes for 1500 It is feasible for the consumer to purchase 3000 unit of consumption.A. TrueB. False 2. A consumer has ·100 hours of time to allocate to either labor or leisure·A real wage w=30·Dividends income of 500·Taxes for 1500 It is feasible for the consumer to purchase 3000 unit of consumption.A. TrueB. False 3. Supose that·Total Factor Productivity increases·Capital depreciates by 10%Everything else equal, what happens to labor demand in the economy?A. It decreases (i.e. shifts to the left of the demand curve)B. It increases (i.e. shifts to the right of the demand curve)C. Not enough information to answer 4. Supose that·Total Factor Productivity decreases by 10%·Capital depreciates by 10%Everything else equal, what happens to labor demand in the economy?A. It decreases (i.e. shifts to the left of the demand curve)B. It increases (i.e. shifts to the right of…6 Assume you can work as many hoursyou wish at £12 per hour (net of tax). If you do not work you have noincome. You have no ability to borrow or lend, so your consumption,c , is simply equal to your income. d) Now assume that you receive an income of £140 per week from anunknown benefactor. Show the impact on your feasible set (nb : be morecareful than Stephen was in his diagrams in Autumn Week 5!), and show anew optimal choice in which consumption increases but labour supplydecreases. Using the concept of the marginal rate of substitution, explainwhy this is a likely outcome.e)Now assume that, starting from the optimal point in d), your wageincreases to £18 per hour. Explain why the impact of this change isambiguous, and relate to the longrun historical experience of wagegrowth in rich countries. Please help me solve 6 e and illustrate on a diagram so I can better understand it please thank you.4. Suppose that the government imposes a pro- portional income tax on the representative con- sumer's wage income. That is, the consumer's wage income is w(1– t)(h– 1) where t is the tax rate. What effect does the income tax have on consumption and labor supply? Explain your results in terms of income and substitution effects.