Suppose that you have just been offered a job that will pay you $1,000 a week forever and are trying to determine whether or not you should accept it. Every week you have been incurring a cost of $50 while searching in extra transportation costs and the government has been providing you with $300 in unemployment insurance benefits. You have also noticed that there seems to be a 25% chance each week that an employer will call you in for an interview and whenever you get an interview they always seem to offer you job. The maximum offer in the job market is $3,000 and all the wage offers come at random form a uniform distribution. Your discount rate is 50% a week.

Use this information to answer the next three questions.

1.) What are the marginal costs of rejecting the offer and continuing to search for work?

2.) What are the marginal benefits of rejecting the offer?

3.) Would you accept or reject the offer?