The cost of offering safe versus risky jobs in the highway construction industry vary across firms. In the end, we would expect the market equilibrium to
A) randomly match workers to jobs.
B) match workers who dislike risk to the highest paying jobs.
C) match workers who dislike risk to firms that find it cheapest to offer safe jobs.
D) have firms that face a high cost of offering safe jobs to pay the lowest wages.
E) have firms randomly choose their level of safety.

Question

Quizplus · Accepted Answer

Firms that find it cheaper to offer safe jobs will attract workers who dislike risk, as these workers will prioritize safety over potentially higher wages for riskier jobs. This creates a market equilibrium where preferences for safety are matched with the cost of providing it.

The Cost of Offering Safe Versus Risky Jobs in the Highway