The equilibrium hedonic wage function is most likely
A) horizontal as no firm will overpay for workers.
B) horizontal as firms will choose their optimal level of safety.
C) a single point, as all firms will choose the same level of risk, and consequently all workers will be paid the same wage.
D) upward sloping as firms that offer riskier jobs usually pay higher wages.
E) downward sloping as firms that offer riskier jobs are usually able to pay lower wages.
Correct Answer:
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Q1: Assume that the market-clearing wages are $10
Q3: The market-clearing wage differential between a safe
Q4: The supply curve of labor to risky
Q5: Under normal circumstances, the equilibrium compensation wage
Q6: Abby's reservation price for working in a
Q7: A hedonic wage function could be applied
Q8: A standard hedonic wage function might show
Q9: The correlation between wages and the probability
Q10: In the standard theory of compensating differentials,
Q11: Risk-averse workers
A) have shallow wage-risk indifference curves
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