= what Maria gets should she not lose her job today - = what Maria gets should she lose her job today Hourly wage = $15 Hourly wages ($) Maria's rent...
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Question

The diagram above illustrates Maria's employment rent for a given amount of effort and a $15 wage in an economy

with an unemployment benefit of $6 of unlimited duration. Once unemployed Maria expects to find a new job with the same wage in 44 weeks. Which statement correctly describes Maria's situation?

q6.png

Select one:

a. Maria does not necessarily prefer to be employed as she experiences disutility of effort when employed.

b. Maria does not want to lose her job because she receives employment rent if she remains employed.

c. Maria's total employment rent is $23,100.

d. Maria is better off by $9 per hour when she is employed than when unemployed.

e. Maria's disutility from not having a job is $3 per hour.

q6.png

= what Maria gets should she not lose her job today
- = what Maria gets should she lose her job today
Hourly wage = $15
Hourly wages ($)
Maria's rent
Employment rent
Unemployment
when employed
per hour
benefit plus the
disutility of effort = $9
Disutility of effort
when employed
Unemployment benefit = $6
What Maria receives
Reservation wage
in unemployment
per hour
benefit during her
period of unemployment
0
0
Number of 35-hour weeks
Expected duration of unemployment
= 44 weeks (1,540 hours)

Top Answer

a.Maria does not necessarily prefer to be employed as she experiences disutility of effort... View the full answer

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