The graph below shows the budget constraint between income and leisure for an individual. For every hour spent in leisure, one less hour is spent working and vice versa. Suppose that the individual starts making more than the guaranteed annual government support level when he/she works more than 2000 hours in a given year (and, in essence, spends 500 hours or less in leisure activities). Move the Government Support line to represent the level of government support for which the above is true. Provide your answer below: 30000 25000 (0, 25000) 20000 15000- 10000- 5000 Government Surport ($3000) (2500, 0) 1000 2000 3000 Leisure (Hours) Income ($)
Introduction:
Income is defined differently depending on the situation, for example, for taxation, financial accounting, or economic analysis. Individuals and corporations commonly define income as the value or quantity received in exchange for their work and goods. Individuals often regard their gross income to be the sum of their earnings in the form of wages and salaries, the return on their investments and property sales, and other revenues. Their net income is the difference between their gross income and the expenditures paid in creating the money.
Similarly, businesses normally consider their entire receipts from services and goods, as well as any interest and dividends received on their cash accounts and reserves linked to the firm, to be their gross income. Businesses' net income, or profit, is calculated by deducting their gross income from their company costs.
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