drop downs say more or less

2. Utility maximization - Trading off labor and leisure The indifference curves on the following graph show Janet's preferences for leisure and consumption for increasing levels of utility, such that her utility increases in both consumption and leisure. Assuming that Janet spends 68 hours each week sleeping, she has a maximum of 100 hours available to her for leisure if she does not work at all. Initially, she works 60 hours (and thus has 40 hours of leisure) and earns $400 per week. Use the grey point (star symbol) to indicate Janet's initial leisure/consumption bundle. Dashed drop lines will automatically extend to both axes. ? 1000 900 Initial bundle 800 700 600 $300 Unemployment Benefits CONSUMPTION (Dollars per week) 500 A 400 Equivalent Bundle 300 Ug 200 U2 $100 Unemployment Benefits 100 U. 0 0 10 20 90 100 110 30 40 50 60 70 80 LEISURE (Hours per week) Equivalent Bundle Now, suppose that Janet is laid off, but she is eligible to collect unemployment benefits of $300 per week. Use the black point (cross symbol) to represent Janet's unemployment point on the previous graph when she consumes $300 per week and has 100 hours of leisure. Suppose that after a month of being unemployed, Janet's friend Felix suggests that she apply for a job at his company, where she could earn her previous salary again by working 60 hours per week. True or False: Because Janet is on a lower indifference curve while receiving unemployment benefits than she was when she was employed, she would be better off working at her friend's company than she is remaining unemployed. O True O False On the previous graph, use the green point (triangle symbol) to indicate the minimum weekly salary (an equivalent bundle) that would make Janet as well off working 60 hours per week as she is when unemployed and collecting $300 in benefits. Now, suppose that the government enacts reforms that reduce unemployment compensation to $100 per week for Janet. On the previous graph, use the orange point (square symbol) to represent Janet's new leisure/consumption bundle when she consumes $100 per week and has 100 hours of leisure. Then use the blue point (circle symbol) to indicate the minimum weekly salary (an equivalent bundle) that would make Janet as well off working 60 hours per week as she is when unemployed and collecting only $100 in benefits. Complete the following table by entering the minimum weekly salary that would make Janet as well off working 60 hours per week as she is when unemployed and collecting the unemployment benefits listed in the following table. Unemployment Benefits (Dollars per week) Equivalent Bundle Salary (Dollars per week) 300.00 100.00 The decrease in unemployment benefits makes Janet likely to accept a job; therefore, based on this example, you would expect that a decrease in benefits would cause workers who are currently collecting unemployment benefits to accept job offers. 2. Utility maximization - Trading off labor and leisure The indifference curves on the following graph show Janet's preferences for leisure and consumption for increasing levels of utility, such that her utility increases in both consumption and leisure. Assuming that Janet spends 68 hours each week sleeping, she has a maximum of 100 hours available to her for leisure if she does not work at all. Initially, she works 60 hours (and thus has 40 hours of leisure) and earns $400 per week. Use the grey point (star symbol) to indicate Janet's initial leisure/consumption bundle. Dashed drop lines will automatically extend to both axes. ? 1000 900 Initial bundle 800 700 600 $300 Unemployment Benefits CONSUMPTION (Dollars per week) 500 A 400 Equivalent Bundle 300 Ug 200 U2 $100 Unemployment Benefits 100 U. 0 0 10 20 90 100 110 30 40 50 60 70 80 LEISURE (Hours per week) Equivalent Bundle Now, suppose that Janet is laid off, but she is eligible to collect unemployment benefits of $300 per week. Use the black point (cross symbol) to represent Janet's unemployment point on the previous graph when she consumes $300 per week and has 100 hours of leisure. Suppose that after a month of being unemployed, Janet's friend Felix suggests that she apply for a job at his company, where she could earn her previous salary again by working 60 hours per week. True or False: Because Janet is on a lower indifference curve while receiving unemployment benefits than she was when she was employed, she would be better off working at her friend's company than she is remaining unemployed. O True O False On the previous graph, use the green point (triangle symbol) to indicate the minimum weekly salary (an equivalent bundle) that would make Janet as well off working 60 hours per week as she is when unemployed and collecting $300 in benefits. Now, suppose that the government enacts reforms that reduce unemployment compensation to $100 per week for Janet. On the previous graph, use the orange point (square symbol) to represent Janet's new leisure/consumption bundle when she consumes $100 per week and has 100 hours of leisure. Then use the blue point (circle symbol) to indicate the minimum weekly salary (an equivalent bundle) that would make Janet as well off working 60 hours per week as she is when unemployed and collecting only $100 in benefits. Complete the following table by entering the minimum weekly salary that would make Janet as well off working 60 hours per week as she is when unemployed and collecting the unemployment benefits listed in the following table. Unemployment Benefits (Dollars per week) Equivalent Bundle Salary (Dollars per week) 300.00 100.00 The decrease in unemployment benefits makes Janet likely to accept a job; therefore, based on this example, you would expect that a decrease in benefits would cause workers who are currently collecting unemployment benefits to accept job offers