Suppose that the market wage is $100 per day and the value placed on the leisure time of unemployed labour is $60 per day. A project is expected to take 50 worker-days to complete. It is expected that 40% of the workers hired will be diverted from employment elsewhere in the economy, and that 60% would otherwise be unemployed.

i What dollar measure of the cost of labour used in the project should be included in the Market Analysis?

ii What dollar measure of the cost of the total amount of labour used in the project should be included in the Efficiency Analysis:

a assuming that the jobs vacated by workers being hired for the project cannot be filled by labour which would otherwise remain unemployed?

b assuming that the jobs vacated by workers being hired for the project are filled by labour which would otherwise remain unemployed?