4. Suppose a person is considering immigrating from their country A (i.e., their home country) to country B. Suppose the person has a utility function that is increasing linearly in income (i.e au am > 0 and a2 U am2 = 0). In country A they expect to earn the average income $18,000 with a 90% chance. In country B, they expect to earn the average income $42,000; however, they only have a 25% chance of getting employment their first year, a 50% chance of getting employment their second year, and a 75% chance of getting employment their third year. Suppose that it cost $10,000 to immigrate from country A to country B. (a) If the discount rate is 0.05 (i.e. 6 = 0.05), does it make sense to immigrate? Why or why not? (b) Suppose they decided to immigrate and after being in country B for one year, the employment market market in country A booms and the probability of having a job is 100%. What does our theory suggest will happen? CS Scanned with CamScanner search