Scenario 6-1. The absolute value of the slope of the consumption-leisure budget line is the after- tax wage, W. Suppose some workers (L'l) earn W for up to 40 hours of work each week, and then earn 2W for any hours worked thereafter (called overtime}. Other workers {L2) earn W for up to 40 hours of work each week, and then only earn 0.5W thereafter as working more than 40 hours requires getting a second job which pays an hourly wage less than their primary job. Both types of workers experience a "kink\" in their consumption-leisure budget line. Figure 6-2 Weekly Weekly Budget Lines Income T _ 40 1- Hours of Leisure Question 2 1 pts Refer to Scenario 6-1 and Figure 6-2. Which one of the statements below describes the consumption-leisure budget line for L1 and L2 (using Figure 6-2)? 0 L1 budget line is CBT @ L1 budget line is ABT 0 L2 budget line is CBT~4U 0 L2 budget line is ABT Question 3 1 pts Refer to Scenario 6-1 and Figure 6-2. Which type of worker is likely to work up to the point of the kink? L2 Question 4 1 pts Refer to Scenario 6-1 and Figure 6-2. Which type of worker is likely to choose a consumption-leisure bundle far away from the kink? L1 Scenario 6-3. Suppose that the government introduces an EITC such that for the first $8,000 in earnings, the government pays 50c per dollar on wages earned. For the next $3,000 of earnings, the credit is held constant at $4,000, and after that point, the credit is reduced at a rate of 20c per dollar earned. When the credit reaches zero, there is no additional EITC. Furthermore assume a worker who can work up to 4,000 hours per year at an hourly wage of $10 per hour. Question 5 1 pts Refer to Scenario 6-3. The benefit of EITC will disappear at how many hours of leisure? (use only numbers) 900 Question 6 1 pts Refer to Scenario 6-3. When the EITC disappears how much does the worker get to consume? (do not use $ sign) 31,000