Question

Need help graphing

Problem on the Reservation Wage and Labor Force Participation Harriett Cane does not work and receives $500 per week in dividends and interest from her vast financial empire. She is just as happy if she works one hour per week to raise her income to $520, or works two hours per week to raise her income to $544, or works three hours per week to raise her income to $572, or works four hours per week to raise her income to $604, as she is when she does not work at all. Answer the following questions using graphical analysis. a. What is Harriett's reservation wage? b. Suppose you offered Harriett a job at $18.00 per hour. Would she take it? If dividend and interest income falls to $400 per week because of a recession, what will happen to Harriett's reservation wage? c.

Answer 1

here we can see that the harriett receives $ 500 per week as a non -labour incomes

we found in different in these five outcomes we can see,

when she works one hour per week to raise her income to $ 520 [$20 for 1 hour ]

when she works for 2 hours per week to raise her income to $ 544[$44 for 2 hours ]

when she works for 3 hours per week to raise her income to $ 572 [ $ 72 FOR 3 HOURS ]

when she works for 4 hours per week to raise her income to $604 [$104 for 4 hours ]

AS SHE IS WHEN SHE DOSENT WORK AT ALL

A ] RESERVATION wage is the wages below which she does not work she needs this minimum wages to start working since she is happy when doesnot work

she has the reservation 20 BELOW THE WAGE RATE

b] noe because $ 18 per hour below the reservation wage

c ] it will not change because she is happy when she does not work as when she works for different hours she has a reservation eages of $20 per hour