Consider an income support program (similar to AFDC before 1967) in which a fami
ID: 1202914 • Letter: C
Question
Consider an income support program (similar to AFDC before 1967) in which a family of four is guaranteed an income of $1500 per month, so that if their income Y is greater than $1500 they get an income of Y and if their income Y is less than $1500, they receive $1500 minus Y to bring their income up to $1500. Suppose only the head of the household works and suppose the wage rate for the head is $15 per hour.
A) If the head of the household is working 80 hours per month. How much more will the head of household get in income if he or she works 10 hours more?
B) If there are costs for working for the head of household (for example, transportation or clothing), is it likely that the head of household would be working 80 hours per month?
C) Would there be many heads of households working 105 hours per month?
Explanation / Answer
wage rate per hour=15 $
head of household works for 80hours per month
total income earned Y =15*80
= 1200$
thus this family will get 300 $ to make up to 1500$
if he works for 10 hours,he will get Y=10*15
=150$
thus he will get 1500-150 $=1350$
in case he works for 100 hours he will get nothing apart from his income which will be 1500$.
b)If there are additional costs involved ,heads might not work that hard as they are assured of an income with no costs.
c)heads of households working for 105 hours per month would be less.