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
Profit for the period The profit for the period has been arrived at after charging the following expenses: Normal 0 false false false EN-US X-NONE

Personal representatives duties Personal representation has the following duties; 1) To provide and pay out of the estate of the deceased, the expenses of a reasonable funeral

Suppose Real Option Inc. has a product that generates the following cash flow. At t=1, the demand can be high or low with equal probability. If demand is high (low) the cash flo

Q. Explain about Financial Accounting Standards? Financial Accounting Standards - Official promulgations, also called STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS, by FINANCIAL

An accountant made the following adjustments at December 31, the end of the accounting period: a. Prepaid insurance, beginning, $400. Payments for insurance during the period, $1,2

For this question you will use the dataset "murder.xls", which includes: • rate = Murder rate per 100,000 • convictions = Number of convictions divided by number of murders • execu

Consolidated acccounts 1AS 27 therefore requires that the holding a company should include the financial results of the subsidiary company in its own financial statements. The

An investment project requires a net investment of $100,000 and is expected to generate annual net cash inflows of $25,000 for 6 years. The firm's cost of capital is 12 percent. De

WILLS A will is the legal declaration by a person of his wishes or intentions regarding the disposition of his property after his death, duly made and executed according to the p

Q. Show the Foreign Tax Credit? Foreign Tax Credit - A U.S. taxpayer who pays or accrues income tax to a foreign country may elect to credit or deduct these taxes in a determin