1.George is currently unemployed. One benefit of being unemployed is leisure (free time). Another benefit of being unemployed is unemployment insurance benefits. Assume that George is getting $500 per week of unemployment insurance benefits.

The cost to George of being unemployed is the wages he would be earning if he was working; assume that George would be earning $900 per week if he was working.

Might George choose to remain unemployed?

a.Yes, if he values his leisure plus the $500 of unemployment insurance benefits more than he values the $900 of wages he is giving up.

b.No, because the $500 of unemployment insurance benefits is less than the $900 of wages he is giving up while unemployed.