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English, 26.05.2020 08:58 44bree

Consider a household consisting of four college friends. The friends have made a commitment
to live together for the next five years. Presently they live in Milwaukee where Abby will earn
$200,000, Bonnie will earn $120,000, Cathy will earn $315,000, and Donna will earn $150,000
over the next five years. They have the option of moving to Miami. Moving to Miami would
impose a one-time moving cost of $5,000 on each person. If they move to Miami, however,
Abby will earn $180,000, Bonnie will earn $150,000, Cathy will earn $300,000, and Donna will
earn $100,000 over the next five years. Moreover, each friend prefers to live in Miami over
Milwaukee. In particular, Abby and Bonnie both value the quality of life in Miami versus
Milwaukee over the next five years at $40,000 while Cathy and Donna place the value at
$25,000 each. Should the household move to Miami or stay in Milwaukee? Is anyone a tiedmover or a tied stayer?

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Answers: 2

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