Shen, who is currently unemployed, is a participant in four welfare programs that offer daily benefits of $10 each to people with no earned income. Each program then curtails its benefits by 50 cents for every dollar of income a recipient earns. Shen's identical twin brother, Sean, is enrolled in an experimental negative income tax program that gives him $40/day in benefits and then taxes him at the rate of 50 percent on each dollar of earned income. Now suppose Shen is offered a job that pays $4/hr, the same wage his brother earns. a. Draw the budget constraint for each twin. Instructions: To earn full credit for this graph you must plot all required points for each curve. 1. Use the line tool (Shen's budget constraint, plat 3 points) to draw the Shen's budget constraint. 2. Use the line tool (Sean's budget constraint, plot 2 points) to draw the Sean's budget constraint. After tax income (3/day) 98 84 70 56 42 28 14 2 4 6 8 10 12 14 16 18 20 22 24 26 Leisure (hrs/day) Tools Shami budgat Soam budger b. How many hours would they have to work before Shen ends up with more net cash and benefits than his brother? Instructions: Enter your answer as a whole number. hours/day
Shen, who is currently unemployed, is a participant in four welfare programs that offer daily benefits of $10 each to people with no earned income. Each program then curtails its benefits by 50 cents for every dollar of income a recipient earns. Shen's identical twin brother, Sean, is enrolled in an experimental negative income tax program that gives him $40/day in benefits and then taxes him at the rate of 50 percent on each dollar of earned income. Now suppose Shen is offered a job that pays $4/hr, the same wage his brother earns. a. Draw the budget constraint for each twin. Instructions: To earn full credit for this graph you must plot all required points for each curve. 1. Use the line tool (Shen's budget constraint, plat 3 points) to draw the Shen's budget constraint. 2. Use the line tool (Sean's budget constraint, plot 2 points) to draw the Sean's budget constraint. After tax income (3/day) 98 84 70 56 42 28 14 2 4 6 8 10 12 14 16 18 20 22 24 26 Leisure (hrs/day) Tools Shami budgat Soam budger b. How many hours would they have to work before Shen ends up with more net cash and benefits than his brother? Instructions: Enter your answer as a whole number. hours/day
Chapter12: Income Distribution, Poverty, And Discrimination
Section: Chapter Questions
Problem 10SQ
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