None 3. Nearly 500 million workers earning the minimum wage ($7.25) in 2022 worked part-time, whichthe Bureau of Labor Statistics defines as than 35 hours per week¹. Suppose a typical worker(Jessie) earns $750 per month and spends money on education and other goods. That income levelqualifies Jessie for public assistance. Consider the two potential transfer programs:C: provide $350 in cash each month;V: provide $450 in a voucher restricted to training [education]a. Graph Jessie's budget constraint under each of the two programs, with education on thehorizontal axis and other goods on the vertical axis.b. On separate graphs, show preferences that lead Jessie to:i. prefer the cash program (C) to the voucher program (V)ii. prefer the voucher program (V) to the cash transferiii. be indifferent between the two programs

3.Minimum Wage: Refers to the bottom wage rate that employers can legally pay their personnel. In…

Answered: 3. Nearly 500 million workers earning…

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter20: Income Inequality And Poverty

Section: Chapter Questions

Problem 3PA

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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 they
Suppose the government implements a negative income tax plan to deal with the poverty problem. The negative income tax rate is set at 30%, and the break-even level of income is set at $20,000. 1. What is the guaranteed annual income level assured each family,. regardless of the amount of income earned by the family? 2. If a family earns $10,000 income, what will their negative income tax subsidy be? 3. If a family earns $30,000 income, what is their disposable income?
1.3 A mandatory health insurance plan costs $4,000. One worker earns $24,500 in employment income and $500 in investment income. Another worker earns $48,000 in employment income and $2,000 in investment income. A third worker earns $68,000 in employment income and $7,000 in investment income. A premium-based system would cost each worker $4,000. A wage tax–based system would cost each worker 8.5 percent of wages. An income tax–based system would cost each worker 8 percent of income. For each worker, calculate the cost of the insurance as a share of total income. E = Employment income I = Investment income P = Premium cost of insurance Premium as a percentage of income = P/(E + I) W = Wage tax cost of insurance = 0.085 × E Wage tax cost as a percentage of income = W/(E + I) T = Income tax cost of insurance = 0.080 × (E + I) Income tax cost as a percentage of income = T/(E + I) 1.4 Which of the plans in exercise 1.3 would impose the larger burden on those with incomes under $25,000: a…
This chapter discusses the importance of economic mobility. If the government increases its support of training programs, it could increase economic mobility from year to year Suppose the United States is considering reducing spending on current welfare programs to increase spending on p mobility. What are some of the advantages of doing so? Check all that apply. People will have greater incentive to work hard. Programs that enhance economic mobility are cheap. O Programs that enhance economic mobility are easier on those who do not make it. across generations within a generation economic
2. Andy's market wage rate is w=$10 per hour, and Andy has T=4,000 hours to divide between market work (h) and leisure L per year. Andy receives a lump-sum subsidy (that is, non-labor income) of V=$2,000 for the purposes of purchasing health insurance provided that he earns less than $20,000 per year. If Andy earns $20,000 or more, his subsidy is zero. a. Draw Andy's budget constraint, assuming he has no other non-labor income.
Please answer based on information above. Would this transfer increase, decrease, or have no effect on income inequality in this group? Redistributing income from the highest earner to the lowest one would reduce the utility of the top earner and increase the utility of the lowest earner. But what would happen to overall utility in the economy? Would it increase, decrease, or remain the same? Explain your answer. (Hint: does the marginal utility of income diminish as one earns more?)
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.
3 Look at these eight explanations or definitions of poverty. Discuss with another student the distinguishing features of the different explanations (spoken or written) and try to identify the type of source for each. Give reasons for your decisions. What is Poverty? a The situation or experience of being poor. b is the inability to attain a minimal standard of living. It can be expressed either in absolute terms (total numbers living below a certain per capita income level) or relative terms (compared with the average standard of living of the country as a whole). First we will consider absolute poverty, c When poverty comes in at the door, love flies out of the window. d The situation facing those in society whose material needs are least satisfied. Poverty can be defined by some absolute measure ... or in relative terms ... In either case it is necessarily an arbitrarily defined concept. e It means not having enough to live on in terms of food and shelter and the other basic…
2) Describe how anti-poverty programs can discourage the poor from working. How might you reduce this disincentive?
Raka has 80 hours per week that she can allocate to work or leisure. Her job pays a wage rate of $20 per hour, but Raka is being taxed on her income in the following way. On the first $400 that she makes, she pays no tax. That is, for the first 20 hours she works, her net wage—what she takes home after taxes—is $20 per hour. On all income above $400, Raka pays a 75% tax. That is, for all hours above the first 20 hours, her net wage rate is only $5 per hour. Her indifference curves conform to the usual assumptions about consumer preferences. Raka’s optimal choice is to work 30 hours.Draw Raka’s time-allocation budget line for a typical week.
Use the information above to help answer these last two questions Would this transfer increase, decrease, or have no effect on income inequality in this group? Redistributing income from the highest earner to the lowest one would reduce the utility of the top earner and increase the utility of the lowest earner. But what would happen to overall utility in the economy? Would it increase, decrease, or remain the same? Explain your answer. (Hint: does the marginal utility of income diminish as one earns more?)
5. Renika has $60,000 dollars in wealth, but the official poverty statistics count her as being in poverty. Explain why this is. If Renika has quit her job in order to go to graduate school, and $60,000 reflects her cash savings, do you agree that she is in poverty? What if Renika is elderly and the $60,000 reflects the value of her rural home?

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