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1) Why is A smith when x=19,y=20? why is B smith x=24, y=40? how to work this out? 2) How do work out the budget

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1) Why is A smith when x=19,y=20? why is B smith x=24, y=40? how to work this out?

2) How do work out the budget constraint in general

3) part b how we know that?

4) Explain the whole question, what it means eg 50% curtailed and answer, explain , any references or diagrams to all parts! thanks

image text in transcribedimage text in transcribedimage text in transcribed
A. Smith, who is currently unemployed, is a participant in four welfare programs that offer daily benefits of E10 each to people with no earned income. Each program then curtails its benefits by 50 cents for every euro of income a recipient earns. A. Smith's identical twin brother, B. Smith, is enrolled in an experimental negative income tax program that gives him (40/day in benefits and then taxes him at the rate of 50 per cent on each euro of earned income. Now suppose A. Smith is offered a job that pays $4/hr, the same wage his brother earns. a. Draw the budget constraint for each twin.b. How many hours would they have to work before A. Smith ends up with more net cash and benefits than his brother?a. After-tax income (than) B. Smith's budget constraint Leisure (hrs May) ' 19 24 b. They would have to work more than 20 hours/day before A. Smith ends up with more after-tax income

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