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
Accounting for Partnerships The owners’ interests in the business are divided into long term and short-term interests. (Long-term interests refer to original capital commitment

how to identify deb who to credit and who to debit

Tally & Co. incurred a pretax operating loss of $100,000 in its first year of operations for both financial reporting and income tax purposes. However, it expects to be profitable

shown below in T-account format are the changes affecting the retained earnings of Brenner-Jude Corporation during 2011. At January 1,2011, the corporation had outstanding 105 mill

Wendy is evaluating a capital budgeting project that should last for 4 years. The project requires $ 800,000 of equipment. She is unsure what depreciation method to use in her anal

A classmate is considering dropping his or her accounting class because he or she cannot understand the rules of debits and credits. Explain the rules of debits and credits in a wa

Comparison with Sector Averages Any conclusion relating to the signs of overtrading needs to be put in the context of the normal values of accounting ratios indicated by the se

I want to do a custom dissertation on IAS 40 investment property which needs to include a brief outline, positive as well as negative international critique with respect to the sta

April 2014 Notepayable $9,825,000 was issued. First due is April 1,2015. 6% interest erroneously expensed a full year''s interest

Would you invest in a project that has a net investment of $14,600 and a single net cash flow of $24,900 in 5 years, if your required rate of return was 12 percent?