Question

You are a professor of economics at a university.​ You've been offered the position of serving as department​ head, which comes with an annual salary that is $7,500 higher than your current salary.​ However, the position will require you to work 200 additional hours per year. Suppose the next best use of your time is spending it with your​ family, which has value of $10 per hour.
The change in net benefit is $___

Answer 1

Answer:

$5,500

Explanation:

Given that,

Increase in salary from switching a job = $7,500 but have to invest additional 200 hours per year

and the opportunity cost of spending this time with the family:

= $10 per hour × 200 hours

= $2,000

Therefore, the net benefit is as follows:

= Amount of increase in salary - opportunity cost

= $7,500 - $2,000

= $5,500

Hence, the change in net benefit is $5,500.