Asked by xolile tibane on Jun 12, 2024
Verified
Suppose that Rosa is considering migration to another country. To move, she will have to spend $5,000 on transportation and $4,000 in application and other processing fees. Rosa's stream of future earnings in her home country is $500,000. She expects to earn a stream of future earnings of $800,000 in another country. Based on this information, Rosa will decide to migrate as long as the implicit costs of leaving her friends and family and adjusting to a new culture are
A) greater than $509,000.
B) less than $300,000.
C) less than $91,000.
D) less than $291,000.
Implicit Costs
The opportunity costs associated with a company's use of resources it owns, representing potential income lost.
Future Earnings
The expected profit or income generated by an investment, job, or business over a future period.
- Understand the principal causes leading to migration, particularly the search for employment opportunities and the need for family consolidation.
- Distinguish between explicit and implicit costs of migration and how they influence migration decisions.
Verified Answer
SC
Skylar CrossJun 12, 2024
Final Answer :
D
Explanation :
The total explicit costs of moving are $5,000 (transportation) + $4,000 (application and other processing fees) = $9,000. The difference in future earnings between the two countries is $800,000 - $500,000 = $300,000. Therefore, for migration to be beneficial, the implicit costs must be less than the net gain after subtracting explicit costs: $300,000 - $9,000 = $291,000.
Learning Objectives
- Understand the principal causes leading to migration, particularly the search for employment opportunities and the need for family consolidation.
- Distinguish between explicit and implicit costs of migration and how they influence migration decisions.