a) Based on these descriptions, which of the two economists is more likely to believe that labour markets are perfectly competitive? Explain. b) Based on these descriptions, which of the two economists is more likely to believe that workers and firms have imperfect information about the safety levels of different firms?
Two economists are discussing the importance of safety regulations in the workplace. Economist A believes that safety regulations are unnecessary and result in suboptimal outcomes for workers and firms. They believe that firms should be able to choose whichever combination of wage and safety level that maximizes their profit. Similarly, they believe that workers should be able to choose to work for whichever of these firms offers their preferred combination of wage and safety level. Economist B disagrees and believes that safety regulations are necessary to protect workers.
a) Based on these descriptions, which of the two economists is more likely to believe that labour markets are perfectly competitive? Explain.
b) Based on these descriptions, which of the two economists is more likely to believe that workers and firms have imperfect information about the safety levels of different firms?
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