Maria's current employment pays her $10 per hour, her disutility of effort is $3 per hour and the unemployment benefit, accessible if unemployed, is $3 per hour. a) Calculate Maria's total employment rent if she loses her job and remains unemployed for 1540 hours and then after that she regains her employment at the same pay rate. Show her total employment rent with the aid of a diagram. b) Calculate how Maria's employment rent will change if unemployment benefits fall by $1 per hour and she also incurs a psychological cost associated with losing her job of $1 per hour. Explain how this change may impact the effort she applies to her current job. c) Name three conditions necessary for the principal-agent problem to occur.

Maria's current employment pays her $10 per hour, her disutility of effort is $3 per hour and the unemployment benefit, accessible if unemployed, is $3 per hour. a) Calculate Maria's total employment rent if she loses her job and remains unemployed for 1540 hours and then after that she regains her employment at the same pay rate. Show her total employment rent with the aid of a diagram. b) Calculate how Maria's employment rent will change if unemployment benefits fall by $1 per hour and she also incurs a psychological cost associated with losing her job of $1 per hour. Explain how this change may impact the effort she applies to her current job. c) Name three conditions necessary for the principal-agent problem to occur.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter21: Unemployment

Section: Chapter Questions

Problem 11RQ: If you an? out of school but working part time, are you considered employed or unemployed in U.S....

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