There are two employers in Bucolic that hire people who do not have a high school degree: a grocery store and a hardware store.The grocery store pays $5.00 per hour and the hardware store pays $6.00 per hour.People who work at either store can work as many hours as they want at those wages.Assume that it takes two hours to interview for a job.Lee works at the grocery store,but would like to work at the hardware store.If Lee interviews at the hardware store,there is a 10% probability of being hired.Assume that Lee is risk-neutral.
What does it cost Lee to interview at the hardware store?

Question

Quizplus · Accepted Answer

The cost for Lee to interview at the hardware store is the opportunity cost of the two hours spent interviewing, which is $5 per hour at the grocery store. Therefore, the total cost is 2 hours x $5/hour = $10.

There Are Two Employers in Bucolic That Hire People Who