A single mother has y=$400 in non-labour income and w=$15 per hour in labour income. She...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A single mother has y=$400 in non-labour income and w=$15 per hour in labour income. She has up to 100 hours available from which she can decide how much to work. The tax rate is zero. a) Write down the budget constraint and draw it on a graph. Make sure to label the axes and intercept correctly. Assume that the mother is already working 40 hours per month. Show the indifference curve and the optimal point on the graph. Suppose that there is a fixed cost of $300 per month for childcare that must be paid as soon as the mother starts working. b) Show how the fixed cost affects the budget line in part (a). Briefly, discuss her likely labour supply response. Use indifference curves on your graph to support your answer. (Hint: leisure is a normal good) c) Determine the share of substitution and income effects in the total effect. Assume that the government defines a childcare subsidy program such that mothers who are working up to 25 hours per month receive an equivalent of 80 percent of their labour income as childcare support. Those who are working between 25 to 60 hours per month are fully reimbursed. This amount decreases by 50% of the labour income earned for hours beyond 60 until it has been phased out. (Example: If a mother works 61 hours, half of the earned income on the last hour is deducted from the full support. That is, she will receive $292.5 in childcare support.) d) Define the equation for the subsidy program for all three parts. childcare subsidy 0 h = 0 budget constraint 0 A single mother has y=$400 in non-labour income and w=$15 per hour in labour income. She has up to 100 hours available from which she can decide how much to work. The tax rate is zero. a) Write down the budget constraint and draw it on a graph. Make sure to label the axes and intercept correctly. Assume that the mother is already working 40 hours per month. Show the indifference curve and the optimal point on the graph. Suppose that there is a fixed cost of $300 per month for childcare that must be paid as soon as the mother starts working. b) Show how the fixed cost affects the budget line in part (a). Briefly, discuss her likely labour supply response. Use indifference curves on your graph to support your answer. (Hint: leisure is a normal good) c) Determine the share of substitution and income effects in the total effect. Assume that the government defines a childcare subsidy program such that mothers who are working up to 25 hours per month receive an equivalent of 80 percent of their labour income as childcare support. Those who are working between 25 to 60 hours per month are fully reimbursed. This amount decreases by 50% of the labour income earned for hours beyond 60 until it has been phased out. (Example: If a mother works 61 hours, half of the earned income on the last hour is deducted from the full support. That is, she will receive $292.5 in childcare support.) d) Define the equation for the subsidy program for all three parts. childcare subsidy 0 h = 0 budget constraint 0
Expert Answer:
Related Book For
Posted Date:
Students also viewed these economics questions
-
cck3 java help them all If a processor exhibited one branch delay slot how would you reorder (and possibly modify) the instructions in the following loop to gain a performance advantage? loop ldr...
-
CANMNMM January of this year. (a) Each item will be held in a record. Describe all the data structures that must refer to these records to implement the required functionality. Describe all the...
-
How did your parents communication with you influence your self-concept?
-
A large philanthropic organization keeps records on the people who have contributed. In addition to keeping records of past giving, the organization buys demographic data on neighborhoods from the...
-
Que Corporation pays a regular dividend of $1 per share. Typically, the stock price drops by $0.80 per share when the stock goes ex-dividend. Suppose the capital gains tax rate is 20%, but investors...
-
A uniform fixed-fixed beam of length \(2 l\) is supported on a pin joint at the midpoint as shown in Fig. 8.38. Derive the frequency equation for determining the natural frequencies of vibration of...
-
Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in using beta to compare the risks of...
-
Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2025, for $14,800. They expect to use the...
-
Jordan received a scholarship of $4,000. He spent one-third of this amount on tuition and one-fourth of the remaining amount on books. What amount of the scholarship was he left with? After selling...
-
A 2,000 par-value bond bearing 8% annual coupons is purchased to yield an effective annual rate of 7%. The amount of principal adjustment during the first year is 6. Find the interest payment during...
-
Solve the following equation for : 2(x-6)+3=4-7(x+1)
-
What are the molecular mechanisms underlying the phenomenon of quorum sensing in bacterial communities, and how do these communication networks coordinate collective behaviors, such as biofilm...
-
A firm has two components in its capital structure, debt and equity. The after-tax cost of debt is 4%. The proportion of debt in the capital structure is 25%. The firm's Weighted Average Cost of...
-
COV-VAR E(r) Stocks Bonds Real Estate Stocks Bonds 12% 0.040 0.0048 0.005 6% 0.0048 0.0064 0.0012 Real Estate 7% 0.005 0.0012 0.01 (a) Calculate the expected return and standard deviation of a...
-
Find the break-even point when the fixed costs are $80,424 and the contribution margin is $30.
-
Evaluate how many lines there are in a true rotational spectrum of CO molecules whose natural vibration frequency is w = 4.09 1014 s1 and moment of inertia I = 1.44 1039 g cm2.
-
Electronic devices contain electric circuits etched into wafers made of silicon. These silicon wafers are sealed with an ultrathin layer of silicon dioxide, in a process known as oxidation. This can...
-
Using the data in Exercise 2: a. Find the first and third quartiles of the profit. b. Find the median profit. c. Find the upper and lower outlier boundaries. d. Are there any outliers? If so, list...
-
For each of the following scatterplots, state the type of association that is exhibited: Choices: positive linear, negative linear, positive nonlinear, negative nonlinear, weak linear. b. d. e.
Study smarter with the SolutionInn App