Question

Exercise 15.2 and Exercise 15.3 asked you to

describe the labor-leisure tradeoff for Jonathon. Since,

in the first example, there is no monetary incentive for

Jonathon to work, explain why he may choose to work

anyway. Explain what the opportunity costs of working

and not working might be for Jonathon in each example.

Using your tables and graphs from Exercise 15.2 and

Exercise 15.3, analyze how the government welfare

system affects Jonathan’s incentive to work.

Short answer

Jonathan may work with future expectation of earning a high income also developed a skill set and work experience else without work, it's not even income.

Step-by-step solution

Step 1. Meaning

Opportunity cost of a decision can be referred to as the cost of giving up or sacrificing the next best alternative.

Step 2. Explanation

The opportunity cost of working is giving up on government benefits. The opportunity cost of not working is not earning a high level of income.

Step 3. Explanation

As the information mentioned in table 1, because Jonathan's is earning higher without working, so he does not have any incentive to work.

Step 4. Explanation 

As the information mentioned in table 2. the optimal number of hours to work is 300 hours. because he has an incentive to work with only lessor working hours.

If he workd for 1500 hours, he earns $16300.

If he stays at home, he earns $10000 &

work for 300 hours he earns $22260.