Question: Ashley can work for $16 per hour for a maximum of 2,000 hours per year. Tulandia currently has a negative income tax system that works
Ashley can work for $16 per hour for a maximum of 2,000 hours per year. Tulandia currently has a negative income tax system that works as follows. If Ashley doesn't work at all then she receives $6,000 from the government. For each dollar she earns, she receives $0.75 less from the government until her benefit reaches 0, which occurs when she earns $8,000 (you can check this yourself if you want). If she earns more than $8,000 then her income in excess of $8,000 is taxed at a 25% rate.
Upload a graph with earnings on the y-axis and leisure on the x-axis showing an individual's budget constraint 1) without any taxes, and 2) with the negative income tax system. Be sure to label key points.
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