Gladys Goodhands Is an Insurance Agent

question 18

Multiple Choice

Gladys Goodhands is an insurance agent.She must choose one and only one of two possible alternative jobs.She can either work for a large national insurance company for which she must work exactly 40 hours a week and will receive a salary of S dollars per week, or she can work as an independent insurance agent, in which case she can work exactly as many hours per week as she wishes and will earn w dollars for every hour that she works.Gladys satisfies the weak axiom of revealed preference and she cares only about how much money she makes and about how much leisure time she has.

• A)If S/40 > w, she will prefer to work for the large national insurance company.
• B)If S/40 < w and she decides to work independently, then it must be that she chooses to work more than 40 hours a week.
• C)If S/40= w and she decides to work independently, then it must be that she chooses to work less than 40 hours a week.
• D)If S/40 = w, she will be indifferent between working for the large insurance company and working independently.
• E)None of the above.

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Definitions:

Reflective

Thoughtful consideration of one's experiences and actions.

Autonomous

Having the freedom to govern oneself or to act independently without being controlled by others.

Abstract

A summary of a research paper or article, or relating to ideas and concepts not physically present or observable.

Emotional

Pertaining to feelings or expressions of sentiment, which can influence thoughts, behavior, and physical states.