The Affordable Care Act of 2010 provides health insurance subsidies to families with incomes between 134 percent and 400 percent of the federal poverty line. For example, a family of four headed by a 55- year- old earning $ 31,389 ( 134 percent of the federal poverty line) in a high- cost area receives a subsidy of $ 22,740. A similar family earning $ 93,699 (400 percent of the federal poverty line) gets a subsidy of $ 14,799. But a family earning $ 1 more—$ 93,700— gets no subsidy. In a diagram with hours of leisure on the horizontal axis and consumption on the vertical axis, graph a budget constraint that depicts this subsidy scheme. Discuss the labor supply implications.

  • CreatedMarch 25, 2015
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