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Mobile App Chapter 15: Q 2. (page 376)
Jonathon is a single father with one child. He can work as a server for \(6 per hour for up to 1,500 hours per
year. He is eligible for welfare, and so if he does not earn any income, he will receive a total of \)10,000 per year.
He can work and still receive government benefits, but for every \(1 of income, his welfare stipend is \)1 less. Create
a table similar to Table 15.4 that shows Jonathan’s options. Use four columns, the first showing number of hours
to work, the second showing his earnings from work, the third showing the government benefits he will receive,
and the fourth column showing his total income (earnings + government support). Sketch a labor-leisure diagram of
Jonathan’s opportunity set with and without government support.
Short Answer
| Amount of hours worked | Earnings from work | Government Support | Total Income |
| 0 | 0 | $10,000 | $10,000 |
| 500 | $3,000 | $7,000 | $10,000 |
| 1000 | $6,000 | $4,000 | $10,000 |
| 1500 | $9,000 | $1,000 | $10,000 |
Step by step solution
Step 1. Given information
Jonathon is a single father with one child. He can work as a server for $6 per hour for up to 1,500 hours per
year. He is eligible for welfare, and so if he does not earn any income, he will receive a total of $10,000 per year.
He can work and still receive government benefits, but for every $1 of income, his welfare stipend is $1 less.
Step 2. Solution
| Amount of hours worked | Earnings from Work ($6 x Amount of hours worked) | Government Support | Total Income (Earnings from work + Government support) |
| 0 | 0 | $10,000 | $10,000 |
| 500 | $3,000 | $7,000 | $10,000 |
| 1000 | $6,000 | $4,000 | $10,000 |
| 1500 | $9,000 | $1,000 | $10,000 |
Step 3. Labor-leisure diagram ofJonathan’s opportunity set with and without government support
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