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.
a. 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.
Malik's economic surplus is $ _______ per hour.
Suppose the demand and supply curves for unskilled labor in the Corvallis labor market are as shown in the accompanying figure. Suppose employers and workers are risk-neutral, and Congress is about to enact a $12 per hour minimum wage. Congressional staff economists have urged legislators to consider adopting an earned-income tax credit instead. Suppose neither workers nor employers would support that proposal unless the expected value of each party’s economic surplus would be at least as great as under the minimum wage.