Question
Yu Yan values her leisure at $10 per hour. If she is unemployed she receives $7 per hour in unemployment benefits. If she is hired
Yu Yan values her leisure at $10 per hour. If she is unemployed she receives $7 per hour in unemployment benefits. If she is hired to work on a public project she will be paid $18 per hour (and will forfeit her unemployment benefit). a. What is the social opportunity cost of an hour of her time (the cost which would be entered in an efficiency benefit-cost analysis)? (2 marks) b. What is the total employment benefit per hour that would be entered in the referent group net benefit account if she was employed on a public project? (2 marks) c. What is the division of the hourly employment benefit between the worker and the government? (2 marks) 5. [2 marks] A CBA analyst summarized the efficiency net benefits from a farming project at 10% discount. The analyst is informed that the investor, the Federal Government and the foreign bank are not part of the Referent Group.
- Investor, $1million (mn) net benefits;
- Federal government, $4mn net benefits;
- State government, $2mn net costs;
- To otherwise local unemployed labour, $3mn net benefits;
- To local banks, $1mn net benefits;
- To foreign banks, $2mn net benefits;
- To the community at large, $5mn net costs from non-market values.
Calculate the referent group and non-referent group net benefits based on this information provided above.
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