Assuming working at home gives you a wage of $100, what would your wage be working in the cubicle office? In the shared workspace? (b) What is the compensating wage differential between these jobs? (c) Explain why the wage is different in each situation, and give an example of another industry- /situation
(a) Assuming working at home gives you a wage of $100, what would your wage be working in the
cubicle office? In the shared workspace?
(b) What is the compensating wage differential between these jobs?
(c) Explain why the wage is different in each situation, and give an example of another industry-
/situation with a compensating wage differential.
![Problem 3
You found your utility preference given by U(w, d) = ", where w is your wage, and d is the amount
of noise (ie - decibels) you must listen to at your job. Let's assume you have the option to work
at home in silence (where d = 36), in a cubicle office (where d = 64), or in an open-air shared
workspace (where d = 100). Further assume the economy is in equilibrium, and you do not have
incentive to change jobs.
(a) Assuming working at home gives you a wage of $100, what would your wage be working in the
cubicle office? In the shared workspace?
(b) What is the compensating wage differential between these jobs?
(c) Explain why the wage is different in each situation, and give an example of another indus-
try/situation with a compensating wage differential.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F41ab350b-4255-4116-9b27-ae72c509b9f8%2F06e35b3e-33f7-4ab6-9e37-b8644571f626%2Fofvxl3_processed.png&w=3840&q=75)
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Consumers' preferences for bundles of commodities or services are measured by the utility function. The ordinal utility adds a numeric value to each preference to indicate how much more one good is preferred over another, while the cardinal utility ranks a customer's decision by preference. A consumer might buy a hamburger to satisfy her hunger and have a good meal, so giving her some utility.
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