The equilibrium hedonic wage function is most likely
A. a single point, as all firms will choose the same level of risk, and consequently all workers will be paid the same wage.
B. downward sloping as firms that offer riskier jobs are usually able to pay lower wages.
C. horizontal as no firm will overpay for workers.
D. upward sloping as firms that offer riskier jobs usually pay higher wages.
E. horizontal as firms will choose their optimal level of safety.
Answer: D
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If a consumer purchases only two goods (x and y) and the demand for x is elastic, then a rise in the price of x:
a. will cause total spending on good y to rise. b. will cause total spending on good y to fall. c. will cause total spending on good y to remain unchanged. d. will have an indeterminate effect on total spending on good y.
When accounting profits are negative, economic profits could be:
A. positive. B. negative. C. zero. D. All of these are possible.
Under EPA regulations, a factory
a. must pay for the right to pollute. b. can increase air pollution from its grinding process if it decreases air pollution from its smelting process. c. cannot under any circumstances build a polluting factory in an area where pollution standards are not being met by existing firms. d. None of the above is correct.
An economist would be most likely to advocate for regulation under which of the following scenarios?
A. It was politically popular. B. Scientific evidence suggested regulation was an appropriate solution. C. There was a strong philosophical argument in favor of regulation. D. Never. Economists find all regulation to be inefficient.