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Two Economic Problems




Question;1. Senator Foggy who you met in the homework has another idea on how to get people receiving Unemployment Compensation benefits back to work. He knows that in the current system, the entire benefit is lost if the person works at all and you, his staff economist, have explained the labor supply disincentive effects of this system. So he has a new idea.a. He proposes that the existing weekly benefit be cut in half. However, a person who returned to work could keep all of the weekly benefit until their weekly wage income was equal to twice the weekly benefit. After that point, the entire weekly benefit would be lost.b. Using the following figures construct a graph and an economic explanation that compares the existing system with the Senator?s proposal. Assume an individual who would get a $200 weekly benefit in the current system (i.e. before the proposed change) and could earn $10 per hour if they worked2. Explain the predicted change in the labor force participation rate of college students of the following events. Use good economic terminology and graphically illustrate your answer with the expected results for a single individual:a. An increase in their expected hourly wage rate, other things held constant.b. An increase in their non-labor income, other things held constantAnalyze these as two separate events.


Paper#56223 | Written in 18-Jul-2015

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