Home
Answered Questions
Economics
) Suppose That A Person Has 2000 Hours To Allocate Each Year Between Leisure And Work. Derive The E

- ) Suppose that a person has 2000 hours to allocate each year
between leisure and work.
- Derive the equation of his budget constraint given an hourly
wage of $15/hour.
**SHOW ALL YOUR WORK**. - Graph his budget constraint line based on the equation you
derived in part a. (
**Consumption (C) on the vertical axis and leisure (L) on the horizontal axis**).**Please make sure to include the value for the vertical and horizontal intercepts**. - Now suppose that the local government introduces an income
guarantee program for single parents in which the income transfer
is $10,000 per year if an individual does not work during that year
(this dollar amount represents the benefit guarantee). If the
individual decides to work, this transfer program imposes a 100%
benefit reduction rate (e.g., each additional hourly wage earned is
reduced by 100%). Derive the new budget constraint equation that
corresponds to this scenario.
**SHOW ALL YOUR WORK**. - Draw the budget line that corresponds to the new scenario on a
new graph. (
**Consumption (C) on the vertical axis and leisure (L) on the horizontal axis**).

- Derive the equation of his budget constraint given an hourly
wage of $15/hour.