Question 1 [50 points] Consider the DMP search model studied in class with a job matching function given by M : Q1/2A1/2 1. There are initially 1000 unemployed workers looking for a job. Let b : 0.4, 2: = 1, ic : 0.057 e : 0.1, and a : 0.5, where k is the cost of creating a vacancy. (a Calculate market tightness j. Show your calculation in detail.[14 points] (b (c (d How many vacancies are posted in the economy?[07 points] What is a job searcher's probability of nding a job?[07 points] What is a rm's probability of recruiting? [07 points] ) ) ) ) 2. What is the rm prot in the equilibrium? (Answer without doing calculations) [05 points] 3. How will an increase in the benet I) affect the equilibrium market tightness 3'? Explain intuitively. [05 points] 4. How will an increase in the productivity 2 affect the equilibrium market tightness j? Explain intuitively. [05 points]