Business, 17.04.2020 00:34, moosaw500

Jane Worth comes from a very wealthy family. Jane's family has set up a trust fund for her with the following incentive system: Each year, Jane is given an allowance from her family's trust fund under the following conditions: (i) If Jane earns less than $40,000 in that year, she gets no money from her trust fund. (ii) If Jane earns at least $40,000 in given year but less than $60,000, she collects $1 from her trust fund for every $1 that she earns above $40,000. (For example, if she earns $41,000 in the labor market, her trust fund pays her $1,000. If she earns $60,000 in the labor market, her trust fund pays her $20,000.) For every dollar that she earns above $60,000, the $20,000 award from her trust fund is reduced by 10 cents ($0.10), until she is back to getting no money from her trust fund. Draw Jane's budget constraint under her family's incentive system. It may help to also draw in the budget constraint that Jane would face if she had no fund from her family. Label the relevant points along the budget constraint. (You have to do simple algebra to find the points)

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Jane Worth comes from a very wealthy family. Jane's family has set up a trust fund for her with the...