Alex earns a wage of 15 an hour if he works up to forty hours per...
Alex earns a wage of 15 an hour if he works up to forty hours per week. however,for every hours, alex works in excess of 40 he earns a wage of 30 an hour。
Alex also faces a 20% tax rate and pays child-care expenses of 4 for every hour he works.
He also receives a child support payment of 80 per week. He has a total of 110 hours per week that he can dedicate to work and leisure.
Graph alex potential income constraint line
Homework Answers
ANSWER
If Alex works for 40 hours,
Income after tax= 15*40*(1-0.2)=$480
Expense in child care= 4*40=$160
Child care support Income= $80
Total Income= 480 - 160 + 80 = $400
If Alex decided to work overtime,
Income after tax= (15*40+30*70)*(0.8)= $2160
Child care expenses= 4*110= $440
Child care support Income= $80
Total Income= 2160 - 440 + 80 =$1800
So Alex's income constarint line will look like
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