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 the total cost of hiring a worker would be ______ at the new firms and ______ at the existing firms.
A)$33,700; $35,700
B)$34,700; $35,000
C)$35,000; $34,700
D)$35,700; $33,700

Question

Quizplus · Accepted Answer

The total cost at the new firms is $34,000 (salary) + $700 (cost of safety) = $34,700. At the existing firms, the cost is just the salary of $35,000.

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