Use graph to illustrate the matching of employers and employees under hedonic wage theory with risk of injury.Assume there are two employees of different types (A and B), and two employers of two different types (X and Y). Worker A maximizes utility along A2 by working for Employer X for WAX and risk level RAX. Worker B maximizes utility along B2 by working for Employer Y for high wage WBY and with high risk level RBYPlease draw the indifference curves and the iso-profit curves with zero profit, point out the two tangent points that measure the matching points for both employers and employees. (Hint: use Risk of Injury as the horizontal axis.)

Given, X for WAX risk level RAX

Answered: Use graph to illustrate the matching of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use graph to illustrate the matching of employers and employees under hedonic wage theory with risk of injury.

Assume there are two employees of different types (A and B), and two employers of two different types (X and Y). Worker A maximizes utility along A₂by working for Employer X for W_AXand risk level R_AX. Worker B maximizes utility along B₂ by working for Employer Y for high wage W_BY and with high risk level R_BY

Please draw the indifference curves and the iso-profit curves with zero profit, point out the two tangent points that measure the matching points for both employers and employees. (Hint: use Risk of Injury as the horizontal axis.)

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