LABOR ECONOMICS
LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 2, Problem 5P
To determine

Determine the reservation wage.

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Dana was dating Wade, a wealthy real estate entrepreneur. Wade was much older than Dana and knew he needed to offer something “special” to make her stay. Wade told Dana that if she continued dating him, he would pay her $10,000 a month. Wade paid Dana for two years when suddenly, for no apparent reason, he stopped the monthly payments. Dana stayed with Wade for another six months, but decided enough was enough and left. She wanted the $60,000 she was owed for the six months; Wade refused to pay her. Is Dana entitled to the $60,000?
After graduation, you face a choice. You can work for a multinational consulting firm and earn a starting salary (including benefits) of $45,000, or you can start your own consulting firm using $5,500 of your own savings. If you keep your money in a savings account, you can earn an interest rate of 5 percent. You choose to start your own consulting firm. At the end of the first year, you add up all of your expenses and revenues. Your expenses include $18,000 for rent, $1,000 for office supplies, $26,000 for labor, and $4,700 for telephone expenses. After operating your consulting firm for a year, your total revenues are $95,000. Instructions: Enter your answers as a whole number. a. What is your accounting profit? b. What is your economic profit?
How many employees does Max's Group Inc. have as of now?
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