Question
In California, a welfare recipient can earn $225 per month without having her benefits reduced. Beyond $225, benefits are reduced by 50 cents for every
In California, a welfare recipient can earn $225 per month without having her benefits reduced. Beyond $225, benefits are reduced by 50 cents for every dollar of earnings. Consider Elizabeth, a resident of California, who can earn $10 per hour. If she does not work at all, she is eligible for welfare benefits of $645.
a. If she works 10 hours, how much are her earnings, how much is her welfare benefit, and how much is her income?
b. . After Elizabeth works a certain number of hours, she does not receive any benefit at all. What is that number of hours?
c. Use your answer to parts a and b to plot her budget constraint.
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