The graph below shows the budget constraint between income and leisure for an individual. For every hour spent in leisure, one less hour is spent working and vice versa. Move the Government Support line to illustrate a situation in which the individual starts making an income higher than the government support income when he/she works more than 1,000 hours. Provide your answer below: 30000 (0, 27 500) 25000 20000 Government Support ($17000) 15000 10000- 5000 (3000, 0) 1000 2000 3000 leisure (Heurs) 4000 Income ($)

The social security tax is 6.2 on employees income earned below 113,000. Is this tax progressive, regressive or proportional?

Provide two examples of goods/services that are classified as private goods/services even though they are provided by a federal government.

What is the difference between poverty and income inequality?

What are the main reasons economists give for the increase in inequality of incomes?

Jonathan 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 Jonathans 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 Jonathans opportunity set with and without government support.

What are some reasons why a certain degree of inequality of income would be expected in a market economy?

What is measured on the two axes of a Lorenz curve?

How can the effect of the poverty trap be reduced?

Describe how each of these changes is likely to affect poverty and inequality: Incomes rise for low-income and high-income workers, but rise more for the high-income earners. Incomes fall for low-income and high-income workers, but fall more for high-income earners.