Question

Malik, a high school senior, is offered a job walking his neighbor's dog for an hour each Friday afternoon. His reservation wage for this task is $6.

If Malik's neighbor offers him $15 per hour, how much economic surplus will Malik enjoy each week as a result of accepting this job?

a) $15 per hour
b) $9 per hour
c) $6 per hour
d) $0 (no economic surplus)

Answer 1

The query pertains to a high school senior's reservation wage for a job, with a focus on economic surplus and labor decisions influenced by wage levels and guaranteed incomes.

Step-by-step explanation:

The question is regarding the concept of a reservation wage which is the lowest wage rate at which a worker would be willing to accept a particular type of job. Malik, who is a high school senior, has a reservation wage of $6 per hour for walking his neighbor's dog. Without the actual offered wage being specified in the question, we cannot determine Malik's economic surplus which is the difference between the wage paid and the reservation wage.

However, using the provided examples of wages for different jobs such as a Burger Queen crew member and a Wall's Mart cleaning crew person, along with the concept of the poverty trap illustrated in Figure 15.3, students can explore how labor choices, income levels, and guaranteed income affect work incentives and economic decision making.