Final answer:
To answer the student's question about Jonathan's labor-leisure opportunity set, one would create a table reflecting the updated welfare policy, showing work hours, earnings, government benefits under the new policy, and total income.
Step-by-step explanation:
The student's question pertains to the construction of a labor-leisure opportunity set before and after a change in welfare policy. In the initial scenario, the welfare policy allows Jonathan, a single father working as a server, to receive a stipend that reduces by a dollar for every dollar he earns. After the policy rework, his government benefits diminish by only 30 cents for every dollar earned. To answer the question, one would create a table showing various work hours, respective earnings, adjusted government benefits under the new policy, and total income, similar to Table 14.4 or 15.4 as the question suggests. In the second part of the task, diagrams would illustrate how Jonathan's labor-leisure opportunity sets have changed due to the modified policy, showing the trade-off between income from work and leisure time reflective of benefits received.
When analyzing Jonathan's employment contract with ABC Inc., the question asks to identify the legal detriment and benefit for both parties:
- a) Jonathan's new legal detriment is committing to work for 2 years, limiting his opportunity to take other employment or leisure.
- b) Jonathan's new legal benefit is the security of earning $100,000 a year.
- c) ABC Inc.'s new legal detriment consists of the financial obligation to pay Jonathan $100,000 a year for his services.
- d) ABC Inc.'s new legal benefit is acquiring Jonathan's services for 2 years, which presumably contributes to the company's productivity and profit.