Question

Lorna works so 30 hours per week and is paid $40 per hour. When working Lorna experiences disutility of $5 per hour. If he becomes unemployed it will take Lorna 12 weeks to find a new job. When unemployed, Lorna receives $300 per week when unemployed. The value of Lorna’s reservation wage is equal to how many dollars per hour?

Answer 1

$$5\times40\times12=9600$$

$$\frac{9600-12\times300}{40}=15$$