Question

Look up the social assistance benefit that would be available for a single individual in Quebec and New Brunswick. Also, look up the minimum wages applicable in each province. Using these 2 pieces of data, draw carefully labelled budget constraints (label both axes, label the wage rate, maximum potential earnings, maximum potential income and non-labour income). (Assume social assistance is the only non-labour income available; assume the provinces apply a 100% clawback on all earnings.)

• Notice that the social assistance benefit is likely reported in annual terms whereas the minimum wage is likely reported as an hourly wage. Make your budget constraints appropriate for a single day (i.e., work out how much social assistance an individual would receive per day).

• Draw a second diagram, adding an indifference curve to illustrate that the individual has chosen to do 7.5 daily hours of full-time work. Add new labels to show earnings and hours of paid work on the diagram.

• Finally, provide a written description of your two diagrams, including a comparison of the two provinces.​

Answer 1

Answer:

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