3. (12 points) Assume that a state government currently provides no child care subsidies to working single parents. Suppose that childcare costs are $10/hour and wages are $20/hour a. Draw a current budget constraint for a single parent (accounting for childcare costs) for a 16 hour day. (2 pts) I b. Now suppose the government adopts a child-care subsidy that pays $5 per hour for each hour a single parent works, up to 8 hours per day. On the same graph, draw the new constraint after the childcare subsidy. Assume there is 16 hours a day available for work or leisure. (2pts) c. Assume someone was working 10 hours a day before the child-care subsidy. Would classic theory predict this subsidy to increase his/her labor supply? Justify your answer with the income and substitution effects. (2 pts) d. Assume someone was working 5 hours a day before the child-care subsidy. Would classic theory predict this subsidy to increase his/her labor supply? Justify your answer with the income and substitution effects. (2 pts) e. Assume a single parent was not working prior to the subsidy. Would classic theory predict this subsidy to increase labor supply of these parents on average? Justify your answer with the income and substitution effects. (2 pts) f. What is a possible unintended consequence of this subsidy on families besides labor supply? (2pts) 3. (12 points) Assume that a state government currently provides no child care subsidies to working single parents. Suppose that childcare costs are $10/hour and wages are $20/hour a. Draw a current budget constraint for a single parent (accounting for childcare costs) for a 16 hour day. (2 pts) I b. Now suppose the government adopts a child-care subsidy that pays $5 per hour for each hour a single parent works, up to 8 hours per day. On the same graph, draw the new constraint after the childcare subsidy. Assume there is 16 hours a day available for work or leisure. (2pts) c. Assume someone was working 10 hours a day before the child-care subsidy. Would classic theory predict this subsidy to increase his/her labor supply? Justify your answer with the income and substitution effects. (2 pts) d. Assume someone was working 5 hours a day before the child-care subsidy. Would classic theory predict this subsidy to increase his/her labor supply? Justify your answer with the income and substitution effects. (2 pts) e. Assume a single parent was not working prior to the subsidy. Would classic theory predict this subsidy to increase labor supply of these parents on average? Justify your answer with the income and substitution effects. (2 pts) f. What is a possible unintended consequence of this subsidy on families besides labor supply? (2pts)