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A means-tested program O gives you more government support if your income is higher
A means-tested program O gives you more government support if your income is higher. gives you less government support if your income is higher. x only grants eligibility to average workers. O requires that people pass a battery of tests to prove eligibility.
Jones, who is currently unemployed, is a participant in three means-tested welfare programs: food stamps, rent stamps, and day care stamps. Each program grants him $150 per week in stamps, which can be used like cash to purchase the good or service they cover. Suppose benefits in each program are reduced by 30 cents for each additional dollar Jones earns in the labor market. That is, if he earns $1 working, he will lose $0.90 worth of benefits. ? He will only make more money if the job he takes pays more than $100 a week. Otherwise, he makes less money. O If he takes a job that pays $120 per week, he will make more money overall. O If he takes a job that pays $120 per week, he will make exactly the same amount of money overall. O If he takes a job that pays $120 per week, he will make less money overall.
Expert Solution
Answer: A means tested program gives you less governent support if your income is high.
Means tests determine if someone qualifies for financial assistance to obtain from government. This test looks at the means of available financial resources to an individual, the source of their income and their capability to pay for a good or service. So, when a person's income is high, less government support is provided to that person.
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Answer: If he takes a job that pays $120 per week, he will make more money overall.
In option a), when Jones takes up the job that pays him $100 per week, he would earn $100 (wages) and the stamps granted to him after reducing $0.90 per dollar earned. i.e. Income = $100 + ($150 - 100*$0.90) = $160.
Now, when Jones is paid $120 per week during his job, he earns Income = $120 + ($150 - 120*0.90) = $162.
So, he makes more overall money if he takes up the job that pays $120 i.e. $162 in comparison to the $100 per week job and $150 stamps grant per week.
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