pg 320

Government Program

A program that guarantees $18,000 in income regardless of work status, reducing benefits by 50 cents for each dollar earned.

Economic Gain

The additional income earned from working more hours, despite the reduction in government assistance.

Net Earnings

The actual income received per hour worked after accounting for the reduction in government payments; for example, earning $8.00 results in a net of $4.00 per hour.

Budget Constraint

The graphical representation of income and leisure choices, with the vertical intercept at $28,000 and the horizontal intercept at $18,000 with 2500 hours of leisure.

Incentive to Work

The motivation for individuals to work, which may be affected by the structure of the government program.

Labor-Leisure Choice

The decision-making process regarding how many hours to work versus how many hours to enjoy leisure time.

Antipoverty Program

A government initiative designed to provide financial support to low-income individuals, which can impact work incentives.

Phasing Out Support

The gradual reduction of government assistance as individuals earn more income, which can lead to higher program costs.

Long-term Preference

The consideration of whether to invest more in a program that encourages work versus a less costly program that discourages work.

Choices on the Budget Line

The potential decisions individuals can make regarding work and income, represented by points like S (less work, more leisure) and R (same work, greater income).