For a cash assistance program with a base payment of $100 and an implicit tax rate of -½, a person who works 10 hours for $10 per hour will have a total cash assistance payment of ___ and total income of _____

Question

Quizplus · Accepted Answer

To calculate the total cash assistance payment, we start with the base payment of $100 and subtract 50% of the earnings from work.

For someone who works 10 hours at $10 per hour, their earnings would be $100 ($10/hour x 10 hours).

The implicit tax rate of -½ means that 50% of their earnings will be deducted from the cash assistance payment.

Therefore, the total cash assistance payment would be:

$100 - 0.5($100) = $50

To calculate the total income, we add the cash assistance payment and the earnings from work:

$50 + $100 = $150

Therefore, the person will have a total cash assistance payment of $50 and a total income of $150. Choice D is the correct answer.

For a Cash Assistance Program with a Base Payment of $100