Question
The market wage a worker can earn is $10/hour. Draw the budget constraints that show the monthly consumption-leisure trade-off for each of the following scenarios:
The market wage a worker can earn is $10/hour. Draw the budget constraints that show the monthly consumption-leisure trade-off for each of the following scenarios:
(i) The state guarantees $500 in income but reduces this benefit by $1 for each $1 of earned labor income by the worker
(ii) The state guarantees $250 in income but reduces this benefit by $1 for every $3 of earned labor income by the worker
(iii)The state guarantees $750 in income but reduces this benefit by $1 for every $2 of earned labor income by the worker until the benefit reaches $300, after which the benefit remains constant.
Please show the work.
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