Question: In the UK, the government introduced a welfare program known as the Working Families' Tax Credit (WFTC) in 1999. The structure of the WFTC is as follows. If a potential worker works less than 16 hours per week, she receives no WFTC. If she works between 16 and 26 hours, she receives 60 British pounds in WFTC. Thereafter, if she works more than 26 hours, for each additional dollar she earns, her WFTC payment will be reduced by 50 pence (a penny, plural pence, is \(1 \%\) of a pound).

1. Sketch the effect of the WFTC on a potential worker's budget constraint (assume that before the introduction of WFTC there were no taxes or welfare benefits).
2. Analyze the effects of the WFTC on labor force participation and hours of work implied by labor supply theory.

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