Question

on and Sally are married. Sally works Jon stays home. Jon has an opportunity to gain employment. He would be working for $10 per hour 30 hours a week. Daycarefor their two children will cost $7 dollars an hour. Jon must drive 15 miles to and from work. It will cost him $4.25 a day for gas to drive to work. Describe the Marginal Cost: The marginalcost would be what they need to do for Jon to get the job. The daycare and the fuel to get to work is the marginal cost.

Answer 1

The marginal cost of Jon's work includes both daycare and fuel costs, totaling $231.25 weekly. Jonathan, a single father, should consider the effective wage rate after accounting for the decrease in welfare benefits when deciding whether to work.

Step-by-step explanation:

The marginal cost of Jon's working would include both the cost of daycare and the cost of commuting to work. In this scenario, if Jon works 30 hours a week at a rate of $10 per hour, he would earn $300 weekly. However, the daycare costs are $7 per hour for two children, which would be $7 x 30 hours = $210, and the cost of gas per day would be $4.25, total for a week as $4.25 x 5 = $21.25. Therefore, the marginal cost of Jon working would be the sum of daycare and gas costs, which is $210 + $21.25 = $231.25 weekly.

Jonathan, who is a single father with one child eligible for welfare, faces a different situation where his welfare benefits decrease by $1 for every $1 earned from work. This creates a disincentive to work as his effective wage rate is lower due to the reduction in government benefits. He should evaluate the opportunity set with and without government support to make an informed decision about work versus leisure time. The labor-leisure diagram would help visualize this choice.