What should happen to labor supply

Reference no: EM133442437

Question 1. Assume 50 working weeks a year if someone earns $75,000 a year ($18,750 a quarter) what is his/her replacement rate (i.e. the ratio of unemployment benefits to weekly earning) (1 pt)

Question 2. Assume 50 working weeks a year if someone earns $50,000 a year what is his/her replacement rate (.5 pt)

Question 3. Assume 50 working weeks a year if someone earns $25,000 a year what is his/her replacement rate (.5 pt)

Question 4. Draw the weekly budget constraint for a worker earning $25,000 a year ($10 an hour) who is eligible for unemployment benefits upon losing their job. Assume no non labor income that they were working 50 hours of time a week/ 50 weeks a year, and that they have a time endowment of 80 hours a week. Add an indifference curve such that they are better off working than receiving unemployment benefits.

Question 5. Now show on the same graph what happens once a $300 per week supplement to unemployment benefit is added as a response to the Covid pandemic. What should happen to labor supply?

Reference no: EM133442437

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