How each program would affect the daily budget constraint

Reference no: EM13201260

Consider the following two antipoverty programs: (1) A payment of $10/day is to be given this year to each person who was classified as poor last year; and (2) each person classified as poor will be given a benefit equal to 20 percent of the wage income he earns each day this year.

a. Assuming that poor persons have the options of working at $4/hr, show how each program would affect the daily budget constraint of a representative poor worker during the current year.

b. Which program would be most likely to reduce the number of hours worked?

Reference no: EM13201260

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