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can anyone help me wid tis plz!!
Consider the model of welfare discussed in class, where individuals are guaranteed at least a minimum
income of G and there is an implicit tax, t, applied to earnings.
(a) Graph an individual’s budget constraint under the welfare program, assuming the individual has
no other non-labor income and could potentially earn a wage, w, if he/she chooses to work. Be
sure to label all aspects of the graph, including the slopes of the budget line segments, the axes,
and the levels of consumption at the various ‘kink’ point(s) on the budget line.
(b) If the lump sum component of welfare is reduced (from G −→ G0) and the implicit tax is also
reduced (from t −→ t0) such that the breakeven level of consumption remains unchanged, what
is the effect on the time allocation of an individual initially working only a few hours? Be sure to
discuss the income and substitution effects
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