https/sakaiuriedu -c201-4329-a89e-289béa8a0167/tool/3601dase-4494-49e5-bldt The

Question

https/sakaiuriedu -c201-4329-a89e-289béa8a0167/tool/3601dase-4494-49e5-bldt The figure beow depicts the efect of a change in the unemployment benen on the workers best response curve. when the unemgo ment rate s ts which of the tollowing statements is correct following a rise in the unemployment benefit? Best response function with U-12% and low unemployment benefit Best response function with U-12% and high unemployment benefit Fl G 0 0 Hourly wage Reservation Wage set by wage firm A. The firm's profit level falls B. The workers reservation wage fais ?.The wage curve shits tothe right D. The firm sets a lower real wage

Explanation / Answer

When there is high unemployment benefit on the workers then their effort per hour would fall as they prefer to remain unemployed than work at the reservation wage hence they need to be offered more wage to substitute work for leisure.

hence wage curve shifts to the right

the correct option is (c)

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