A firm has the choice of offering "dirty" jobs that are likely to cause severe health problems for its workers or of offering "clean" jobs by installing safety equipment at a cost of $5 per hour per employee that will substantially reduce the chances of health problems. The firm will
A) install the safety equipment if workers can ascertain whether they are working a dirty or a clean job.
B) never willingly choose to install the costly safety equipment.
C) never install the safety equipment without a government subsidy to do so.
D) install the safety equipment if workers are willing to be paid $3 per hour less in a clean job than in a dirty job.
E) willingly install the safety equipment if workers are willing to be paid $7 per hour less in a clean job than in a dirty job.

Question

Quizplus · Accepted Answer

If workers are willing to accept $7 less per hour for a clean job, the firm saves $2 per hour per employee after installing the $5 safety equipment, making it a financially beneficial decision.

A Firm Has the Choice of Offering "Dirty" Jobs That