responsibilities) increasing in quantity from left to right. Also on the horizontal axis is the number of hours at

paid work, going from zero hours on the right to the maximum of 2,500 hours on the left. On the vertical axis is

the amount of income per year rising from low to higher amounts of income. The budget constraint line shows

that at zero hours of leisure and 2,500 hours of work, the maximum amount of income is $20,000 ($8 × 2,500

hours). At the other extreme of the budget constraint line, an individual would work zero hours, earn zero

income, but enjoy 2,500 hours of leisure. At point A on the budget constraint line, by working 40 hours a week,

50 weeks a year, the utility-maximizing choice is to work a total of 2,000 hours per year and earn $16,000.

Now suppose that a government antipoverty program guarantees every family with a single mother and two

children $18,000 in income. This is represented on the graph by a horizontal line at $18,000. With this
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