1.As a hypothetical case, suppose the typical individual has a utility function expressed as U = (C - 20)*(L - 10), where C is consumption and L is leisure time. The current wage, w, is $20 and she has a weekly payments from the Government of V = $100. She only has 20 hours per week to divide between work hours, h, and Leisure.

A number of countries and communities are considering reducing payments to all people. This is functionally a decrease in "Guaranteed Basic Income". Suppose the country of interest sets the weekly payment at $50 instead of $100.

a.Using the Neo-classical labor supply model with reference to specific numerical values, discuss the consequences of the above change to the "Guaranteed Basic Income".

b.Using the basic Supply and Demand for labor approach discuss the consequences of the "Guaranteed Basic Income" policy on the overall labor market.

c.Using a feedback approach, from the individual Neo-classical labor supply to market equilibrium and back to labor supply, discuss the net results of the Guaranteed Basic Income policy given.