ProblemSet5-AK - Economics 3203 Spring 2010 Problem Set #...

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Economics 3203 – Spring 2010 Problem Set # 5: Labor Supply (2) ANSWER KEY 1. a. The worker currently has a monthly net income of Y = $9*160 - $4*160 = $5*160 = $800 Therefore, the largest monthly payment that could be given would be $800 – any higher offer might induce the worker to quit her job and join the workfare program. b. There are many possible reasons for the worker to keep her job even if there are some financial advantages to the workfare program. Examples include: - stigma associated with being in a public program - a desire to maintain the flexibility/hours options that may exist in her current job - not wanting to become dependent on a public program for income - not liking the public job as well as her current job, or finding it less likely to result in promotion - finding the free child care to be of lower quality than the current paid child care 2. (sample answer) As an economist, I would wonder why two types of garment workers (working at home or in factories) could make different wages for the same production. If the workers at home
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This note was uploaded on 06/07/2011 for the course ECP 3202 taught by Professor Hamersma during the Fall '10 term at University of Florida.

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ProblemSet5-AK - Economics 3203 Spring 2010 Problem Set #...

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