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Draw a graph with leisure on the horizontal axis and income on the vertical axis.  Assume 320...

Draw a graph with leisure on the horizontal axis and income on the vertical axis.  Assume 320 discretionary hours in a month, that can be used for labor or leisure, and that the wage is $10 an hour.  Draw the budget constraint, and an indifference curve corresponding to choosing a full time 160 hour a month job.  Label earnings. 


Assume the family would qualify for $600 in TANF benefits each month if hours of labor are zero.  The program offers a $225 earned income disregard, and then a 50% benefit reduction rate.  Add this TANF program to the budget constraint.  Label kink points and the level of earnings at which TANF benefits are eliminated.  Based on your graph, does the household choose to work a full time job, or opt for participation in the TANF program?


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