1) Use the following parameters to sketch two budget constraints, one with no (or $0) basic personal amount (BPA) and one with $1000 BPA, in a diagram:

i. Assume there is only one tax bracket with income tax rate 50%

ii. Time endowment = 24, wage rate per hour = $100

iii. No other deductions and tax credits.

Based on your diagram, discuss how the increase in BPA from $0 to $1000 would affect the labor supply due to the substitution and income effects.