Assume that a welfare program pays $200 per week if a person does not work and reduces the welfare benefit of dollar for dollar with earnings. Assume that the individual does not have any other non wage income. Also assume that the individual has a market wage rate of $10/ hour. Assume a maximum of 120hours of leisure per week (T= 120/ week).
Suppose that in the absence of the program, the person would work 20 hours per week. What does the program have on the individuals hours of work? USE A GRAPH (NO EXCEL) TO SHOW ILLUSTRATE THE ANSWER.
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