Illustrate individuals budget constraint, Financial Accounting

An individual is currently working 40 hours per week, earning $10 per hour.  He loses his job and successfully applies for unemployment insurance.  The insurance plan works as follows:

The receives a weekly benefit equal to 50 percent of his earnings prior to losing his job (i.e., the benefit level is $200 per week).

The is allowed to earn income while receiving unemployment benefits.  If he earns an amount up to ¼ of pre-unemployment earnings, his benefit is unaffected.  If he earns more than than ¼ but less than ½ of pre-unemployment earnings, his weekly benefit is cut in ½, to $100.  If he earns more than ½ of pre-unemployment earnings, he no longer receives a benefit.

a.  Illustrate this individual's budget constraint in a carefully labelled graph.  For simplicity, assume that he is able to earn a wage of $10 per hour while on unemployment and that there is no unearned income except for unemployment insurance benefits.

b.  Show that it would be economically irrational for unemployment insurance recipients to want to work more than 10 hours per week. Show that this program might induce individuals to leave full-time jobs in order to receive unemployment insurance benefits.

 

Posted Date: 3/20/2013 4:18:14 AM | Location : United States







Related Discussions:- Illustrate individuals budget constraint, Assignment Help, Ask Question on Illustrate individuals budget constraint, Get Answer, Expert's Help, Illustrate individuals budget constraint Discussions

Write discussion on Illustrate individuals budget constraint
Your posts are moderated
Related Questions
Remedies available to beneficiary 1) Injunction - to prevent unauthorised action by trustees; 2) Personal action - a trustee is only liable for his own acts and defaul

On December 31, 2010, the stockholders' equity section of Arndt, Inc., was as follows: Common stock, par value $10; authorized 30,000 shares; issued and outstanding 9,000 shares $

(a) You are working as the CFO of Jeans Co. The company is currently seeking a new supplier for their goods. There are two main suppliers of choice, XYZ Ltd and ABC Ltd. The contra

Q. What do you mean by Inflation? Predicts of future inflation of sales prices and variable costs should be prepared Therefore that a nominal NPV evaluation is able to be under

Question: A proprietary life company issues only non-profit guaranteed growth bonds. The company invests only in equities with an expected return of 10% p.a, the risk free rate

Budgetary Control is a technique of managerial control through budgets. Elaborate.

Accounting Policies These financial statements have been prepared under the historical cost basis of accounting which is modified to accommodate the revaluation of certain proper

Question : Financial analysts will use ratios to compare performance of companies in the same industry. Lenders will frequently use ratio analysis to help them decide whethe

Statement of Retained Earnings Landon Corporation was organized on January 2, 2010, with the investment of $100,000 by each of its two stockholders. Net income for its first year o

On 1 January 2009, a company, Yeti, granted an employee the right to choose between (i) 30,000 Yeti shares or (ii) a cash-payment equivalent to the price of 24,000 Yeti shares on 3