An individual has two employment opportunities involving the same work conditions but different incomes. Job 1 yields 50 in year 1, and 30 in year 2. Job 2 yields 40 in year 1 and 40 in year 2. The markets are perfect and bonds yield 5%. la. If you consume everything in year 1, how much more could you consume from Job 1 than Job 2? 1b. If you consume everything in year 2, how much more could you consume from Job 2 than Job 1?
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![An individual has two employment
opportunities involving the same work
conditions but different incomes.
Job 1 yields 50 in year 1, and 30 in year 2.
Job 2 yields 40 in year 1 and 40 in year 2.
The markets are perfect and bonds yield
5%.
la. If you consume everything in year 1,
how much more could you consume from
Job 1 than Job 2?
1b. If you consume everything in year 2,
how much more could you consume from
Job 2 than Job 1?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6df95d2b-42bf-49ce-8f9c-2bad8f2ecdb6%2F6fcb68d3-8739-49fa-8033-dc2d6268cdca%2F2v7nbc_processed.jpeg&w=3840&q=75)
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- In the upcoming year, the income from your current job will be $50,000. There is a 0.5 chance that you will keep your job and earn this income, and 0.2 chance that you will get a rise and earn 75,000. However, there is 0.3 chance that you will be laid off, putting you out of work for a time and forcing you to accept a lower paying job. In this case, your income is $25.000. The expected value of your income is thus $47,500.a) If your utility function has the formula 500I - 0.0002I2, determine the risk premium associated with this lottery.b) Provide an interpretation of the risk premium in this particular example.Answer the following: You are contemplating a job offer with an advertising agency where you will make 54,000 in your first year of employment. Alternatively, you can begin to work with your father's business where you will earn an annual salary of 38,000. 1. Where will you work? a. Advertising agency b. Fathers business c. I choose not to work 2. If you choose to work where you will earn most, what is the opportunity cost? a. 54,000 b. 38,000 3. What is the differential revenue?a. 54,000 b. 38,000 c. 16,000Assume a society consists of two economic groups: one group is rich and the other group is poor. Suppose that 50 percent of the population is rich while the other 50 percent of the population is poor. Consider two scenarios. Scenario A: The rich have $60,000 each, while the poor have $2,000 each. Scenario B: The rich have $7,500 each, while the poor have $750 each. If you only care about average income and not about equity, you would prefer V. which has an average income of S (Enter your response to the nearest dollar.) Now suppose that you only care about equity or inequality. In this case, you would prefer which has a rich-to-poor ratio of (Round your response to one decimal place.) Finally, suppose you only care about living standards. In this case, you would prefer because it has lower poverty.
- Old MacDonald produces hay. He has a single employee, Jack. If Jack works for x hours he can produce x bales of hay. Each bale of hay sells for $1. The cost to Jack of working x hours is c(x) = x2/10. (a) What is the efficient number of bales of hay for Jack to cut? _____________ (b) If the most that Jack could earn elsewhere is zero, how much would MacDonald have to pay him to get him to work the efficient amount? ______________ (c) What is MacDonald’s net profit? _______________ (d) Suppose that Jack would receive $1 for passing out leaflets, an activity that involves no effort whatsoever. How much would he have to receive from MacDonald for producing the efficient number of bales of hay? ____________ (e) Suppose now that the opportunity for passing out leaflets is no longer available, but that MacDonald decides to rent his hayfield out to Jack for a flat fee. How much would he rent it for? ___________You have a job in a company that pays you P350,000 per year. For a better future, you want to get a Master's degree that could cost P100,000 but cannot continue your job while studying. If you decide to give up your job and return to school to earn a Master's degree, how much would be your opportunity cost?You have been hired for your dream job in healthcare. Your salary is $10,000 per month. Your taxes are $2500 per month. Your rent, food and transportation are a total $5000 per month. How much is your gross income? How much is your disposable income? What is another more common word for disposable income? How much is your discretionary income? Give me one example of what you would use your discretionary income for and how much you'd spend on that item?
- You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current salary. You look into opening a small grocery store. Suppose that the store has annual costs of $150,000 for labor, $50,000 for rent, and $30,000 for equipment. There is a one-half probability that revenues will be $210,000 and a one-half probability that revenues will be $400,000. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers. Enter a loss as a negative number. a. In the low-revenue situation, what will your accounting profit or loss be? $ What will your accounting profit or loss be in the high-revenue situation? $ b. On average, how much do you expect your revenue to be? $ Your accounting profit? $ Your economic profit? $…Suppose, you start your own business which is a pet store. The total cost of purchasing supplies and hiring labor is $50,000 per year. To run the pet store, you quit your job that pays $45,000 per year and use the building that you already own (a building like yours rents out for $60,000 per year). Also, your car payment is $24,000 per year (you may use your car for the business sometimes). What is the total opportunity cost of opening up a pet store for a year?Suppose that a firm is considering hiring an employee whose wage would be $100 per hour. This employee's marginal product of labor (per hour) is 5 units and the good produced sells for $65 per unit. Will the firm hire the new employee? OYes ONo How much additional profit (or loss) will the firm generate by hiring this employee? (Make sure to add the negative sign if the firm faces a loss)
- Suppose that you decide to go to summer school. Your tuition cost is $3,000, books and supplies cost $300, and room and board cost $1,000. You would not work while you attend summer school. If you did not go to summer school you would take a summer job which earns you $5,000 for the summer and your cost of room and board in the summer would be $2,000. Considering only this information, what is the dollar value of your total opportunity cost of attending summer school?To recap, W.T.’s planning on the following: Newspaper ad $120 per month Social media manager $100 per month; $1 per job scheduled Payment collection $0.75 per job Gas $4.00 per job Considering his analysis of similar services and to keep things simple, W.T. plans to price all jobs the same and charge $15 per job. Because of this flat rate, he anticipates he’ll likely need to create different types of “jobs”. For example, purchasing a list of items at the grocery store would be one job, while a bundle of 2-3 small errands such as picking up dry cleaning and prescriptions, might be considered one job. We’ll deal with those details later. For now, assume that all jobs are priced at $15 each and all have the associated variable expenses listed above. Because this will be a new business, W.T. knows business will likely be slow at the beginning. Complete the following table assuming W.T. completes 10 jobs in a single month. Item Per Job Total (10…Brad Edwards is earning $36,000 a year in a city located in the Midwest. He is interviewing for a position in a city with a cost of living 18 percent higher than where he currently lives. What is the minimum salary Brad would need at his new job to maintain the same standard of living? Minimum salary