The following problem will use different numbers for different students. Please use the following table to choose the numbers you will use. If your student number ends with Use an hourly wage (w) Use an hourly effort cost (c) Use an hourly unemployment benefit (b) $6 $9 $12 0-3 4-6 7-9 $10 $15 $20 $4 $8 $12 a. Write your student number and the associated wage, hourly effort cost, and hourly unemployment benefit from the table (2 points). Consider an office worker, Reema, who works 30 hours per week at the hourly wage that you chose. At that wage, Reema exerts 75 percent effort (e), where effort is defined as the proportion of time during each hour on the job that she actually spends working. Reema does not like to exert effort, and it leads to an hourly disutility equal to cxe, where c is the hourly effort cost you chose. She puts in the effort because she is concerned about losing her job. If she loses her job, she expects to be unemployed for 25 weeks during which she will receive the hourly unemployment benefit you chose for each hour that she had been working (30 hours). b. Write the functions and calculate the values of Reema's (i) hourly employment rent and (ii) her employment rent from her job (8 points). C. Suppose that Reema's expected duration of unemployment if she loses her job increases to 30 weeks. Recalculate her hourly employment rent and job employment rent. Do her hourly employment rent and job employment rent increase, decrease, or stay the same? Provide and explain the calculations (8 points). d. Continue to assume that Reema's expected duration of joblessness if she loses her job is 30 weeks and continue to use all the other information from the problem. Graph the levels of effort that Reema will supply at different wages. Clearly label and explain all parts of the graph including what is on the horizontal axis, what is on the vertical axis, the reservation wage, and the amount of effort at the wage that you chose (10 points). e. Fully explain the Labor Discipline Model for this situation. Use a graph based on the model to show how much Reema's employer will pay her and how much effort she will provide. Clearly label and explain all parts of the graph. Referring to the graph, explain how Reema and her employer arrived at their solution (15 points). f. Suppose that Reema's expectations for her duration of unemployment increase further to 40 weeks. Using the Labor Discipline Model, explain how the wage Reema receives and the effort she provides will change (5 points). The following problem will use different numbers for different students. Please use the following table to choose the numbers you will use. If your student number ends with Use an hourly wage (w) Use an hourly effort cost (c) Use an hourly unemployment benefit (b) $6 $9 $12 0-3 4-6 7-9 $10 $15 $20 $4 $8 $12 a. Write your student number and the associated wage, hourly effort cost, and hourly unemployment benefit from the table (2 points). Consider an office worker, Reema, who works 30 hours per week at the hourly wage that you chose. At that wage, Reema exerts 75 percent effort (e), where effort is defined as the proportion of time during each hour on the job that she actually spends working. Reema does not like to exert effort, and it leads to an hourly disutility equal to cxe, where c is the hourly effort cost you chose. She puts in the effort because she is concerned about losing her job. If she loses her job, she expects to be unemployed for 25 weeks during which she will receive the hourly unemployment benefit you chose for each hour that she had been working (30 hours). b. Write the functions and calculate the values of Reema's (i) hourly employment rent and (ii) her employment rent from her job (8 points). C. Suppose that Reema's expected duration of unemployment if she loses her job increases to 30 weeks. Recalculate her hourly employment rent and job employment rent. Do her hourly employment rent and job employment rent increase, decrease, or stay the same? Provide and explain the calculations (8 points). d. Continue to assume that Reema's expected duration of joblessness if she loses her job is 30 weeks and continue to use all the other information from the problem. Graph the levels of effort that Reema will supply at different wages. Clearly label and explain all parts of the graph including what is on the horizontal axis, what is on the vertical axis, the reservation wage, and the amount of effort at the wage that you chose (10 points). e. Fully explain the Labor Discipline Model for this situation. Use a graph based on the model to show how much Reema's employer will pay her and how much effort she will provide. Clearly label and explain all parts of the graph. Referring to the graph, explain how Reema and her employer arrived at their solution (15 points). f. Suppose that Reema's expectations for her duration of unemployment increase further to 40 weeks. Using the Labor Discipline Model, explain how the wage Reema receives and the effort she provides will change (5 points)
