Draw budget constraints that show monthly consumption

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Reference no: EM131199004

An individual can earn $12 per hour if he or she works. Draw the budget constraints that show the monthly consumption-leisure trade-off under the following three welfare programs:

a. The government guarantees $600 per month in income and reduces that benefit by $1 for each $1 of labor income.

b. The government guarantees $300 per month in income and reduces that benefit by $1 for every $3 of labor income.

c. The government guarantees $900 per month in income and reduces that benefit by $1 for every $2 in labor income, until the benefit reaches $300 per month. After that point, the government does not reduce the benefit at all.

Reference no: EM131199004

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