1. A new public works project requires 200,000 hours of labor to complete.

a. Suppose the labor market is perfectly competitive and the market wage is $15. What is the opportunity cost of the labor employed?

b. Suppose that there is currently unemployment among workers, and that there are some workers who would willingly work for $10 per hour. What is the opportunity cost of the labor employed? Does this vary depending on the fraction of would -be unemployed workers hired for the project?

c. If your answers to

(a) and

(b) differ, explain why.