Suppose the benefit formulas for various welfare programs are Food stamps: $400 per month 0.30(Wages) Housing

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Suppose the benefit formulas for various welfare programs are Food stamps: $400 per month − 0.30(Wages)

Housing assistance: $1,000 per month − 0.25(Wages)

Cash welfare: $400 per month − 0.67(Wages above $500)

(a) How much will someone earning $800 a month receive in

(i) Food stamps?

(ii) Housing assistance?

(iii) Cash welfare?

(b) What is the cumulative marginal tax rate at

(i) Wages under $500?

(ii) Wages over $500?

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The Micro Economy Today

ISBN: 9781118152003

15th Edition

Authors: Bradley R. Schiller, Karen Gebhardt

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