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# Explain the result make sure to mention the income

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Unformatted text preview: hat pays monthly benefits of \$1000 to single parents with one child; this benefit is reduced by one dollar for each dollar of earnings. Assume now that this province is considering a policy proposal to adopt a new program that pays to "qualified" recipients a monthly benefit B= 0.5 * (\$3200 monthly earnings). For example, a person working 150 hours a month at \$8 per hour has earnings of \$1200, and in addition this person would receive welfare benefits of B=0.5*(\$3200-1200)=\$1000, for a total income of \$2200. To qualify for this proposed program, a person must work 125 hours per month. Draw the budget constraint associated with both the current and the proposed welfare programs for a person who earns \$8 per hour. Assume that the maximum number of hours a person can work in a month is 400. Then analyze the work incentives of the proposed program compared to those of the current welfare program. Include a labor-leisure diagram showing the budget constraints under the two programs. Make sure to discuss whether the incentives will vary by one's indifference curve. 4. Read Free Clinic paper and write a one page summary....
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