E202ProblemSet9.2

E202ProblemSet9.2 - food stamps, rent stamps, and day care...

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b. Suppose the Clothing Workers Union now sets a weekly minimum acceptable wage of $230 per week. All the workers Stone hires belong to the union. How does the minimum wage affect Stone’s decision about how many workers to hire? c. If the minimum wage set by the union had been $400 per week, how would the minimum wage affect Stone’s decision about how many workers to hire? d. If Stone again faces a market wage of $250 per week but the price of jeans rises to $45, how many workers will the company now hire? 6. Jones, who is currently unemployed, is a participant in three means-tested welfare programs:
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Unformatted text preview: food stamps, rent stamps, and day care stamps. Each program grants him $150 per month in stamps, which can be used like cash to purchase the good or service they cover. a. If benefits in each program are reduced by 40 cents for each additional dollar Jones earns in the labor market, how will Joness economic position change if he accepts a job paying $120 per week? b. In light of your answer to part a, explain why means testing for welfare recipients has undesirable effects on work incentives....
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