Angela's Reservation Option in Case 2 vs. Case 1 (IC2 vs. IC1)
Angela's reservation option improves significantly in Case 2 relative to Case 1. In Case 2, her fallback is seeking other work, providing a higher utility than her alternatives in Case 1, such as forced labor. This distinction is visually captured in Figure 5.13, where her reservation indifference curve for Case 2, labeled IC2, is shown to be higher than IC1, the curve representing her reservation option under forced labor.
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Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
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Angela's Reservation Option in Case 2 vs. Case 1 (IC2 vs. IC1)
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Learn After
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