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Suppose that the Government of Ontario considers to adopting one of the following welfare policies based on an ordinary monthly income-leisure choice model.Assume that20 daysare

Suppose that the Government of Ontario considers to adopting one of the following welfare policies based on an ordinarymonthlyincome-leisure choice model.Assume that20 daysare available in total and wagerate is $100 perday per family.

(1)A lump-sum grant of $500 per month per family supplied and applying 100% tax rate for every dollar earned.

(2)A lump-sum grant of $400 per monthly per family supplied and applying 25% tax rate for every dollar earned.

Identify which of the above policies to increase the work incentive most and least.

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