Your next door neighbor offers to pay you to babysit. She offers you $7 an hour. You turn down the offer as you think you need at least $8 per hour. What is your reservation wage?
A- $7.25. Reservation wage is the same as minimum wage
B- $7
C- $8
D- It depends on what state you live in.
C- $8
Option C- $8 is the correct answer. The reservation wage is the minimum wage at which an individual is willing to accept a job offer. In this case, since you turned down the offer of $7 per hour, it implies that your reservation wage is higher than $7. The closest option to that is $8, so the correct answer is C.
The reservation wage is the minimum amount of money that a person is willing to accept for a specific job or task. In this scenario, your neighbor offered you $7 per hour to babysit, but you turned down the offer because you believe you need at least $8 per hour. Therefore, your reservation wage is the minimum amount you are willing to accept, which in this case is $8 per hour.
So the correct answer is:
C- $8