Question: The state government hires a computer programmer from another state for a month at a cost of $30,000, which is $10,000 more than she could
The state government hires a computer programmer from another state for a month at a cost of $30,000, which is $10,000 more than she could earn during that period in her home state. The state government also pays $1000 for accommodation in a rent-controlled apartment with a market value of $1200. The programmer edits some programs and saves the state government $40,000. Assuming the Referent Group consists of residents of the state:
i Calculate the net benefit to the Referent Group.
ii Using the appropriate shadow-prices, calculate the net benefit of the project according to an Efficiency Analysis.
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