Suppose there are two types of jobs-safe and risky. Safe jobs currently pay $10 per hour. Risky jobs currently pay $20 per hour. The government intervenes in the market, mandating that all firms offer safe jobs and pay a wage of $10 per hour. Which of the following is true?
A) Workers who originally worked safe jobs are helped by the policy.
B) Firms that originally offered safe jobs are hurt by the policy.
C) Workers who originally worked risky jobs are helped by the policy.
D) Firms that originally offered risky jobs are hurt by the policy.
E) No one is hurt by the new policy.

Question

Quizplus · Accepted Answer

Firms that originally offered risky jobs are hurt by the policy because they now have to adjust their wage offerings to comply with the new mandate, potentially reducing their competitiveness or increasing their labor costs if they previously compensated for risk with higher wages.

Suppose There Are Two Types of Jobs-Safe and Risky