Maria earns $15 per hour in her current job and works 40 hours per week. Her disutility of effort is measured as $1 per hour of work. In the case that she loses her job, she receives $5 per hour unemployment benefit. Additionally, being unemployed has psychological and social costs which is a disutility equivalent to $2 per hour. She expects to find a job at the same wage and disutility of effort after 44 weeks, and her planning horizon is 100 weeks. Which of the following are true?

Question

Answer

Maria’s employment rent if she can get another job with the same wage rate after 44 weeks of being unemployed is more than $6,160.

Answer

The employment rent per hour is $3.

Answer

Maria’s employment rent if she can only get a job at the same wage rate after 44 weeks of being unemployed is less than $7,700.

Crowdly

Maria earns $15 per hour in her current job and works 40 hours per week. Her dis...

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