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
Joe seeks your assistance in assessing these investment options. He has five particular concerns, as outlined below. 1. Regarding his photographic studio, which would be a bette

Financial ratios have been categorized in a variety of manners. You may determine the subsequent broad bases having been utilized in current literature:  Primacy Criterion: Th

Nieland Industries had one patent recorded on its books as of January 1, 2014. This patent had a book value of $288,000 and a remaining useful life of 8 years. During 2014, Nieland

Below is the Trial Balance for Clay Employment Services, year ending December 31, 2011.  Previous period's information were as follows: net receivables, $290,000 and inventory, $82

Your Company makes 42,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct material $15.00 Direc

The following market data are available for interest rates and volatilities associated with standard maturities: Suppose you are holding a bond portfolio which invests in a

Q. What is Lifetime Learning Credit? Lifetime Learning Credit - This allows a credit for 20 percent of qualified tuition and fees paid by taxpayer with respect to one or more s

When a company sells a product for cash, it generally recognize the revenue. However, there are situations when it is not always clear when a company should recognize the revenue.

In the current year, Company A is formed with $630,000 in capital from the sale of 21,000 shares of stock at $30 a share. Company A, which has no other operations, immediately acqu

1. Would export businesses prefer a rising or declining dollar? Would it be the same for a European tourist on a budget and visiting the Grand Canyon? Explain your answer. 2. Wh