Suppose a project will require 2000 local labour hours at the construction stage. Assume it can hire 40 % of labour who would otherwise be unemployed and 60% of labour will be sourced from elsewhere in the economy. The market wage of labour is $45 per hour while the leisure time for unemployed labour is measured at $20 per hour. Match the following values you would use in the CBA: Total labour cost (market price) Total labour cost (shadow price) Total net employment Total opportunity cost of labour A. 16000 B. 70000 C. 50000 D. 20000 E. 90000
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This is simply the total labor hours multiplied by the market wage, which is 2000 hours * $45/hour = $90,000. So, Total labor cost (market price) matches with A. $90,000. Show more…
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