Question 24Consider a perfectly competitive labor market where firmscompete over wages and risk of injury. There are two typesof workers with different risk preferences:Worker A's utility is UA = w - √• Worker B's utility is UB = w - √OThere are firms that can offer any level of risk between 0 and50. Firms offer wages according to:w=12+0.5rIf X 6.5, what is the compensating wage differentialbetween Worker B's equilibrium wage and Worker A'sequilibrium wage? (I.e. find 0AB = ww*)Round your answer to the nearest hundredth.

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Answered: Consider a perfectly competitive labor…

Consider a perfectly competitive labor market where firms compete over wages and risk of injury. There are two types of workers with different risk preferences: Worker A's utility is UA = w√r O

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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