E202ProblemSet9.3 - equally among the 400 students who live...

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7. Sue is offered a job reshelving books in the University of Montana library from noon until 1pm each Friday. Her reservation wage for this task is $10 per hour. a. If the library director offers Sue $100 per hour, how much economic surplus will she enjoy as a result of accepting the job? b. Now suppose the library director announces that the earnings from the job will be divided
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Unformatted text preview: equally among the 400 students who live in Sues dormitory. Will Sue still accept? c. Explain how your answers to parts a and b illustrate one of the incentive problems inherent in income redistribution programs....
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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