2. Amanda is a single mom. She has a job that pays $15 per hour, and she has 2 kids. For simplicity, assume there is no overtime pay. She has no other income. Consumption goods cost $1 per unit. > a. Draw Amanda's daily budget line, assuming she has 16 hours to allocate between paid work, and other activities that we'll collectively label "leisure." (Make it large enough to accommodate some additions.) b. Now, we need to think about annual earnings, so we'll assume Amanda cannot work weekends at all. So she can work 5 days a week for 50 weeks a year (her company shuts down 2 weeks around Christmas and New Year). Suppose the EITC will provide a wage subsidy for Amanda at a rate of 25%%, up until she earns $19,500 for the year (not counting the subsidy). After that point, she gets no additional subsidy. Any earnings over $39,000 will be taxed at 10%, until the subsidy paid out is completely taxed back. Draw the new budget line Amanda faces with this program. Indicate values on the two axes where any kinks occur. > c. Where do you think Amanda is likely to maximize her utility? Explain why she'd be likely to choose that particular point or range of points. If there is more than one good possibility, in your view, feel free to put forward more than one. > d. Now suppose Amanda is suddenly able to collect child support of $200 per week. How will this change her budget line? How do you think this will change her optimization point, if at all? Why?> e. Would either of the changes here (adding the EITC program or adding child support income) likely change Amanda's reservation wage - the lowest wage at which she's willing to work in the market? How and why, or why not? Suppose the government adds a new subsidy that will pay a portion of the child care costs for single parents with incomes below $100,000 per year. Will this change Amanda's reservation wage? How and why (or why not)? >