Consider a simple economy with search unemployment. The matching function is given by M = 0.1Q 4/12A 8/12 The supply curve of the workers is given by v(Q) = Q 2/6 Let b = 0.4, z = 1, k = 0.05, e= 0.1 and a = 0.5, where k is the cost of creating a vacancy.

1. Calculate the market tightness j. Show your calculation in detail.[10 points]

2. what is the job-finding probability?[10 points]

3. what is the vacancy rate?[5 points]

4. what is the expected payoff for the worker?[5 points]

Consider a simple economy with search unemployment. The matching function is given by M = 0.104/12 A8/12 The supply curve of the workers is given by "(Q) = 02/6 Let b = 0.4, z = 1, k = 0.05, e= 0.1 and a = 0.5, where k is the cost of creating a vacancy. 1. Calculate the market tightness j. Show your calculation in detail.[10 points] 2. what is the job-finding probability? [10 points] 3. what is the vacancy rate? [5 points] 4. what is the expected payoff for the worker? [5 points]