Final answer:
Susan, who can earn $8 an hour and is eligible for $16,000 in government assistance, faces a situation where additional work does not increase her total income due to reduction in government support. Opportunity costs also play a role in her work incentives.
Step-by-step explanation:
The situation described involves Susan, a single mother who can earn $8 per hour by working up to 1,800 hours per year. Without any income, she is eligible to receive a government assistance of $16,000 annually. To analyze Susan's labor and government support relationship, we create a table showing her choices of work hours, earnings from work, government support, and total income.
As Susan earns more from work, her government support decreases by the same amount, effectively creating a scenario where her total income does not increase despite working more hours, which could discourage her from working more than certain hours. Moreover, opportunity costs such as childcare, transportation, and time with her children may further reduce her incentive to work.