For this set of questions Lecture 2 and Chapter 3 will be particularly useful 8. As in Lecture 2 we are going to think about people choosing an optimal apartment. We will continue to assume public transport is free and that the next best option to an hour commuting is to work at a person's hourly wage. We will, however, consider people who earn different wages: Commuting Time Rent Apartment (hours/month) ($/month) Very Close 5 hours $1,180 $100 / month = 1280. Close 10 hours 100 $1,090 $ 200 / month 6 - 60 Far 15 hours $1,030 = 1330 $ 300/ month - 30- Very Far 20 hours $1,000 = 1400- $ 400 / month a. Suppose Alan has a wage of $20 hour. i. What is his opportunity cost of commuting for one hour? (2pt) $ 20 X 1 = $20 ii. What is his commuting cost if he lives very close? (2pt) $ 20 X 5 = $100 iii. Solve Alan's optimization problem. Where would he choose to live? (2pt) Alan should choose to live in a " very close ' apartment .b. Becky has chosen to live very close. What is the lowest her hourly wage can be that is consistent with her decision being optimal? (2pt) ii: 9&3 c. Charlie has chosen to live close. What is the lowest his hourly wage can be that is consistent with his decision being optimal? (2pt) d. Daniella has chosen to live far. What is the lowest her hourly wage can be that is consistent with her decision being optimal? (2pt) e. Emily has chosen to live very far. i. What is the lowest her hourly wage can be that is consistent with her decision being optimal? (Zpt) ii. What is the highest her hourly wage can be that is consistent with her decision being optimal? (Zpt)