The wage differential between a safe and risky job is $5,000.Which of the following is not true?
A)The marginal worker is indifferent between working the safe or risky job.
B)All but the marginal worker in safe jobs require a wage differential above $5,000 to accept a risky job.
C)All but the marginal worker in the risky job require a wage differential below $5,000 to be indifferent between safe and risky jobs.
D)The per-worker cost for any firm to change technologies to offer safe jobs in place of risky jobs is $5,000.
E)The average per worker cost of offering safe jobs exceeds $5,000 at the risky firms.

Question

Quizplus · Accepted Answer

The wage differential of $5,000 is the amount needed for individuals to be indifferent between a safe and risky job. Therefore, choice A is true. Choice B is true because all but the marginal worker in safe jobs require a higher wage to switch to a risky job. Choice C is true because all but the marginal worker in the risky job require a higher wage differential to be indifferent between safe and risky jobs. Choice E may or may not be true, but it is not relevant to the statement about the wage differential. Choice D is not true because the wage differential is not related to the cost of technology changes.

The Wage Differential Between a Safe and Risky Job Is