1. The reservation wage will decrease for an individual if:
A. the marginal value of time in nonmarket activities declines
B. the absolute value of the slope of the budget constraint increases at the point corresponding to zero hours of work.
C. the market wage rate declines.
D. nonlabor income rises.
2. Under the welfare system depicted in the diagram above, the marginal wage for a welfare recipient is:
A. less than zero.
B. equal to zero
C. greater than zero
D. None of the above is correct.