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3. (8 Points) Tied Movers and Stayers Two single, eternally lived individuals who discount the future at 10% per year have just graduated from college
3. (8 Points) Tied Movers and Stayers Two single, eternally lived individuals who discount the future at 10% per year have just graduated from college in their home state of Pennsylvania. Assume that they both maximize the lifetime present value of individual income net of mobility cost if single, and of total household income net of mobility cost if married. Rachel has a job offer in Pennsylvania that pays $60 thousand per year, and a job offer in Florida that pays $90 thousand per year. Patrick has a job offer in Pennsylvania that pays $90 thousand per year, and a job offer in Florida that pays $70 thousand per year. Rachel's mobility cost is MR 2 0 and Patrick's mobility cost is Mp 2 0. a) (4 points) Suppose that if Rachel remained single that she would choose to move to Florida. Find the upper bound on MR. For example, could MR be as high as $100,000? As high as $400,000? b) (4 points) Let Rachel and Patrick marry. Show the conditions under which Patrick will be a tied mover and the conditions under which Rachel will be a tied stayer
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