Question

Cole and monica live in a community property state. they got married this year on june 15th. they received all of the following items of income during the year. which is community income?

a) monica earned $20,000 in wages from january 1st through may 31st.
b) monica inherited $10,000 from her uncle on august 5th.
c) cole earned $55,000 in self-employment income from july 1st through december 31st.
d) cole's brother gave him a gift of $25,000 on march 3rd.

Answer 1

The analysis involves creating a table showing the trade-off between hours worked, earnings from work, government support, and total income for individuals receiving welfare. It illustrates the welfare trap, where additional earnings result in reduced government benefits, potentially affecting the incentive to work. Opportunity costs may also influence the decision to work more hours.

Step-by-step explanation:

Government Benefits and Work Incentives

When constructing a table to analyze work choices in light of government benefits that are reduced as income rises, the situation presents a basic income and work trade-off scenario, often used in economics to describe the impact of welfare programs on a person's incentive to work. Below is an example table:

• Hours Worked: Number of hours Susan or Jonathon decides to work
• Earnings from Work: The amount earned from working, calculated by multiplying the hourly wage by the number of hours worked
• Government Support: Welfare benefits received, which decrease as earnings from work increase
• Total Income: The sum of earnings from work plus government support

In analyzing the table, we can see that as Susan or Jonathon work more hours, their earnings from work increase, but their government support decreases, leading to a situation where there might be a limited financial gain from working additional hours. This is known as the welfare trap, where the marginal benefit of working more is reduced by the loss of benefits, potentially reducing the work incentive. Further, additional opportunity costs, such as childcare or transportation expenses, may also reduce the incentive to work more hours.

Answer 2

A table reflecting hours worked, earnings, and government benefits reveals the impacts on work incentives under government assistance programs. A labor-leisure diagram further illustrates the trade-offs between work hours and leisure that such programs might impose on individuals like Jonathan.

Step-by-step explanation:

The scenario presented involves income trade-offs and the impact of government assistance programs on individual work incentives. Considering both situations, we can see how government benefits taper off as earned income increases, potentially creating a disincentive for additional work due to no actual financial gain. To demonstrate this, we create a table displaying hours worked, earned income, government benefits, and total income.

Hours WorkedEarnings from WorkGovernment BenefitsTotal Income0$0$10,000$10,000500$3,000$7,000$10,0001,500$9,000$1,000$10,000

A labor-leisure diagram then illustrates how Jonathan's opportunity set changes with and without government support, revealing the trade-offs between work hours and leisure time.