Question: In California, a welfare recipient can earn $225 per month without having her benefits reduced. Beyond $225, benefits are reduced by 50 cents for every dollar of earnings. Consider Elizabeth, a resident of California, who can earn $10 per hour. If she does not work at all, she is eligible for welfare benefits of $645.

a. If she works 10 hours, how much are her earnings, how much is her welfare benefit, and how much is her income?

b. After Elizabeth works a certain number of hours, she does not receive any benefit at an. What is that number of hours?

c. Use your answer to pans a and b to plot her budget constraint.

d. Sketch a set of indifference curves consistent with Elizabeths participating in the labor market.