A new recreational area in a small town will take 20 full-time (40 hours per week) workers 3 weeks to complete. In addition, the cost of materials is expected to be $75,000.

a. If the labor market is perfectly competitive and the market wage is $20, what are the total opportunity costs of taking on this project? SHOW YOUR WORK AND EXPLAIN?

b. If instead the 20 individuals hired were unemployed and valued leisure at $10 per hour, would the opportunity cost of the project change? SHOW YOUR WORK AND EXPLAIN DIFFERENCE BETWEEN (a) and (b)

Answer rating: 100% (QA)

Opportunity Costs of Recreational Area Project a Perfect Competition Market Wage Step 1 Calculate to... View the full answer