What is the break-even level of earnings under the program

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Reference no: EM13208669

Assume that a welfare program pays $100 per week if a person does not work and reduces the welfare benefit dollar for dollar with earnings. Assume that the individuals does not have any other nonwage income. ALso assume the individual has a market wage of $5/hour. Assume maximum of 120 hours of leisure per week (T=120/week)?

1. What is the break-even level of earnings under the program? What is the breakeven level of hour of work under the program? I have gotten help on the first part of the question and found that the break even level of earnings was $140 and he would work for 20 hours/week.

The other part
2. Suppose in the absence of the program the person would work 20 hours per week? what effect does the program have on the individual's hours of work?

so would it be 5 X H - 0 = 20
In the absence of the program he would work 4 hours more?

Reference no: EM13208669

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