Having the government regulate workplace safety would most likely improve economic efficiency if
A) the cost of introducing safety equipment is high.
B) workers value safe work environments.
C) workers are unable to correctly judge the risk associated with a particular job.
D) firms are unable to attract workers to safe jobs.
E) firms and workers differ on the value they place on safe versus risky jobs.

Question

Quizplus · Accepted Answer

Workers being unable to correctly judge the risk associated with a particular job creates a situation of information asymmetry, where one party (the employer) has more or better information than the other (the employee). This can lead to inefficient market outcomes, as workers may accept jobs without fully understanding the risks involved. Government regulation can help correct this by ensuring that safety standards are met, thereby improving economic efficiency by aligning the perceived risk with the actual risk.

Having the Government Regulate Workplace Safety Would Most Likely Improve