Jen is offered a job answering the phone in the State U economics department during lunchtime,from noon to 1 P.M. ,Tuesdays and Thursdays.Her reservation wage for this job is $15/hour.
If the department chair offers Jen $150/week,and Jen doesn't have to share her income with anyone else.Will Jen accept this job?

Question

Quizplus · Accepted Answer

Jen will work 2 hours a week (noon-1pm, Tuesday and Thursday), and she will be paid $150/week. So, her hourly wage is ($150/week) / (2 hours/week) = $75/hour. As her reservation wage is $15/hour, accepting the job means that Jen will receive a positive surplus of $60/hour ($75/hour - $15/hour). Therefore, accepting the job will be profitable for Jen.

Jen Is Offered a Job Answering the Phone in the State