Maria earns $12 per hour in her current job and works 35 hours a week. Her disutility of effort is equivalent to a cost of $2 per hour of work. If she loses her job, she will receive unemployment benefit equivalent to $6 per hour. Additionally, being unemployed has psychological and social costs equivalent to $1 per hour. Then: a. The employment rent per hour is $5 b. Maria's reservation wage is $6 per hour. c. Maria's employment rent if she can get another job with the same wage rate ($12) after 44 weeks of being unemployed is less than her employment rent if she can only get a job at a lower wage rate after 44 weeks of being unemployed. FALSE

Maria earns $12 per hour in her current job and works 35 hours a week. Her disutility of effort is equivalent to a cost of $2 per hour of work. If she loses her job, she will receive unemployment benefit equivalent to $6 per hour. Additionally, being unemployed has psychological and social costs equivalent to $1 per hour. Then: a. The employment rent per hour is $5 b. Maria's reservation wage is $6 per hour. c. Maria's employment rent if she can get another job with the same wage rate ($12) after 44 weeks of being unemployed is less than her employment rent if she can only get a job at a lower wage rate after 44 weeks of being unemployed. FALSE

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.3P

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