Graphing budget constraints.
Suppose which a state government currently provides no child care subsidies to working single parents, but which it now wants to adopt a plan which will encourage labour force participation among single parents. Suppose which child care costs are hourly, and suppose the government adopts a child-care subsidy which pays $3 per hour for each hour the parent works, up to 8 hours per day.
1. Draw a current budget constraint for an Supposed single mother (net of child care costs) who loves leisure
2. Draw the new constraint. Discuss the likely effects on labour force participation and hours of work