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In: Economics

Harriett Cane does not work and receives $500 per week in divindends and interest. She is...

Harriett Cane does not work and receives $500 per week in divindends and interest. She is just as happy if she works 1 hour per week to raise her income to $520, or works 2 hours per week to raise her income to $544, or works 3 hours per week to raise her income to $572, or works 4 hours per week to raise her income to $604, as she is when she doesn't work at all. Answer the following questions using GRAPHICAL ANALYSIS

1. What is Harriettls reservation wage?

2. Suppose you offer her a job at $18 per hour. Would she take it?

3. If dividend and interests income falls to $400 per week, what will happen to HArriett's reservation wage>

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Expert Solution

Rahul Sunny answered 4 months ago
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