1. Consider the figure below, which depicts the matching of jobs and workers. There are twojobs at firms X and Y and two workers A and B.WageRateWayWAXRAXRRyyRisk of Injurya. Which worker is more risk averse? A or B? Which job does he take? How much does hecarn? What is the highest utility he can achieve given the job opportunities?b. Which firm has the higher cost of reducing risk? Whom will it employ? How much will itpay? What is the highest level of profits it can achieve given the labor force?c. Draw the hedonic wage function on the graph and explain what kind of information itcontains.d. What are the two main behavioral insights of the hedonic wage theory?

Risk averse people will not be willing to take risks.

1. Consider the figure below, which depicts the matching of jobs and workers. There are two jobs at firms X and Y and two workers A and B. Wage Rate B2 Way R WAX RAX Ray Risk of Injury a. Which worker is more risk averse? A or B? Which job does he take? How much does he carn? What is the highest utility he can achieve given the job opportunities?

1. Consider the figure below, which depicts the matching of jobs and workers. There are two jobs at firms X and Y and two workers A and B. Wage Rate B2 Way R WAX RAX Ray Risk of Injury a. Which worker is more risk averse? A or B? Which job does he take? How much does he carn? What is the highest utility he can achieve given the job opportunities?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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