Consider a government program that provides all low-income adults with a check that equals

timer Asked: Mar 14th, 2015

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 All low-income adults receive this check, whether anyone in the household works or not. Assume that leisure is a normal good. a. Using the labor-leisure model, illustrate the effect the welfare program has on the budgetconstraint of a person who receives $0 in non-wage income in the absence of the government program. What effect does this program have on the worker’s cost of leisure? Explain. b. Consider the program’s effect low-income workers who wereemployed before the program’s implementation. What is the proposed program’s effect on the number of hours worked by low-income workers?

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