33) A welfare program offers $4000 of benefits to those not working. For those working, it reduces benefits dollar for dollar until there are no benefits to be paid. The program is then modified so that for every dollar earned, benefits are only reduced by 50 cents. Mr. X earned $6000 under the old program. What will be the effect of the new program (noting that he is in the range to receive benefits ): A) both his income and substitution effect will decrease his desired hours of work. B) both his income and substitution effect will increase his desired hours of work. C) his income effect will increase his desired hours of work but his substitution effect will decrease his desired hours of work. D) his income effect will decrease his desired hours of work but his substitution effect will increase his desired hours of work. Answer: A Question Status: New