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(b) Suppose Andrew Yang is elected (mayor and then) president. He implements a $1000 per person per month Universal Basic Income. How would you represent this new policy in the static labor supply model from third week of class? What variable would change? Does this affect the preferences or the budget? How would this change the worker's optimal labor hours? Graph the optimal labor hours before and after the introduction of the Universal Basic Income (UBI) in Leisure-Consumption space, following the methods we used in class. Does the UBI introduction have an income effect on labor hours? If so, does this effect increase or decrease labor hours? Does the UBI have a substitution effect on labor hours? If so, does this effect increase or decrease labor hours? (b) Suppose Andrew Yang is elected (mayor and then) president. He implements a $1000 per person per month Universal Basic Income. How would you represent this new policy in the static labor supply model from third week of class? What variable would change? Does this affect the preferences or the budget? How would this change the worker's optimal labor hours? Graph the optimal labor hours before and after the introduction of the Universal Basic Income (UBI) in Leisure-Consumption space, following the methods we used in class. Does the UBI introduction have an income effect on labor hours? If so, does this effect increase or decrease labor hours? Does the UBI have a substitution effect on labor hours? If so, does this effect increase or decrease labor hours

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