Answered>Order 1684

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)