Scenario IV
Michael Achu and Gonzalo Reyes both live in small towns. Michael Achu lives in Buea, Cameroon and Gonzalo Reyes lives in El Torno, Bolivia.
Assume that the prevailing wage for a typical worker in Yaoundé, a big metropolitan city in Cameroon, is CFA500 francs per day. In addition, the prevailing wage for a typical worker in Santa Cruz, a big metropolitan city in Bolivia, is Bs400 bolivars per day. There is a 50% change that Michael if he migrates to Yaoundé, earns CFA500 per day while there is a 75% chance that Gonzalo earns Bs400 per day in Santa Cruz.
1. Compute Michael and Gonzalo’s expected wage if they migrate to their respective big cities.
2. Suppose that Michael actually earns CFA250 francs per day in Buea while Gonzalo earns Bs300 per day in El Torno as laborers working on cocoa farms. However, Gonzalo is very close to his three younger sisters and enjoys swimming in the local creeks surrounding El Torno. Will both Michael and Gonzalo migrate to Yaoundé and Santa Cruz, respectively? Explain.
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Scenario IV Michael Achu and Gonzalo Reyes both live in small towns. Michael Achu lives in...