Draw the budget line facing the worker under new program

Reference no: EM132128974

Question: Assume that workers whose incomes are less than $10,000 currently pay no federal income taxes. Suppose a new government program guarantees each worker $5000, whether or not he or she earns any income. For all earned income up to $10,000, the worker must pay a 50-percent tax. Draw the budget line facing the worker under this new program. How is the program likely to affect the labor supply curve of workers?

Reference no: EM132128974

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