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A family - husband, wife, and two young children- reside in southern Italy: the husband cur- rently earns 30,000 euros per year, whereas the wife does not work. The couple is considering moving to northern Italy, where the husband could find a new job paying him 35,000 euros per year, and the wife could start working at 15,000 euros per year. Nonetheless, the family likes the South much better: living there has a monetary utility in present value terms of 35,000 euros. Moreover, should the wife start to work, the family would have to pay childcare costs equal to 10,000 euros per year. (a) If the family is supposed to live in northern Italy for the current and the next 3 years and has a discount rate of 12 percent, is it convenient for the family to (immediately) migrate to the north? (b) Would your answer be different if childcare was cheaper, e.g. equal to 9,000 euros per year?

A family - husband, wife, and two young children- reside in southern Italy: the husband cur- rently earns 30,000 euros per year, whereas the wife does not work. The couple is considering moving to northern Italy, where the husband could find a new job paying him 35,000 euros per year, and the wife could start working at 15,000 euros per year. Nonetheless, the family likes the South much better: living there has a monetary utility in present value terms of 35,000 euros. Moreover, should the wife start to work, the family would have to pay childcare costs equal to 10,000 euros per year. (a) If the family is supposed to live in northern Italy for the current and the next 3 years and has a discount rate of 12 percent, is it convenient for the family to (immediately) migrate to the north? (b) Would your answer be different if childcare was cheaper, e.g. equal to 9,000 euros per year?

Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter2: Systems Of Linear Equations
Section2.4: Applications
Problem 28EQ
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(11) A family - husband, wife, and two young children - reside in southern Italy: the husband cur- rently earns 30,000 euros per year, whereas the wife does not work. The couple is considering moving to northern Italy, where the husband could find a new job paying him 35,000 euros per year, and the wife could start working at 15,000 euros per year. Nonetheless, the family likes the South much better: living there has a monetary utility in present value terms of 35,000 euros. Moreover, should the wife start to work, the family would have to pay childcare costs equal to 10,000 euros per year. (a) If the family is supposed to live in northern Italy for the current and the next 3 years and has a discount rate of 12 percent, is it convenient for the family to (immediately) migrate to the north? (b) Would your answer be different if childcare was cheaper, e.g. equal to 9,000 euros per year?
Transcribed Image Text:(11) A family - husband, wife, and two young children - reside in southern Italy: the husband cur- rently earns 30,000 euros per year, whereas the wife does not work. The couple is considering moving to northern Italy, where the husband could find a new job paying him 35,000 euros per year, and the wife could start working at 15,000 euros per year. Nonetheless, the family likes the South much better: living there has a monetary utility in present value terms of 35,000 euros. Moreover, should the wife start to work, the family would have to pay childcare costs equal to 10,000 euros per year. (a) If the family is supposed to live in northern Italy for the current and the next 3 years and has a discount rate of 12 percent, is it convenient for the family to (immediately) migrate to the north? (b) Would your answer be different if childcare was cheaper, e.g. equal to 9,000 euros per year?
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