Elucidating the improvement in the welfare of the low skilled employees.
Suppose the government is concerned that the going wage rate of $6 per hour for low skilled workers is too low. In an effort to improve the "welfare" of such workers the government offers to pay each low skilled worker $100 with the condition that they do not work any hours.
a. Can this plan succeed in increasing a worker's welfare? Demonstrate.
b. Must the plan be successful? Demonstrate.
c. From the worker's prospective, on what does the success of the plan depend? Explain.