Suppose that all workers value a safe job $2,000 per year more than a risky job. The cost to firms of providing a safe job is $700 per year for each worker. Firms currently pay workers $35,000 per year, without any effort to improve safety. If new firms began to offer workers $34,000 per year and safe jobs, then
A)no workers would apply for jobs at the new firms.
B)only low-quality workers would apply for jobs at the new firms.
C)only injury-prone workers would apply for jobs at the new firms.
D)all workers would apply for jobs at the new firms.

Question

Quizplus · Accepted Answer

Since workers value a safe job $2,000 more than a risky job and firms can provide a safe job for only $700, it makes sense for firms to offer safe jobs at a lower wage of $34,000 per year. Even though the wage is lower, workers would still prefer the safe job due to the higher value they place on safety. Thus, all workers would apply for jobs at the new firms.

Suppose That All Workers Value a Safe Job $2,000 Per