Will this safety regulation enable Marsha to get a higher utility level? Explain your reasoning in a few sentences. (b) Suppose that the town government mandates new safety standards, so that the factory Marsha works at must offer safety levels of 50⁰ or higher. (a) Explain in a few sentences how Marsha’s bad information and lack of job mobility have caused her to lose utility. Marsha realizes that she was incorrect about her level of workplace safety however, there is no other work available in Marsha’s new town, and she does not have enough money to move, so that she is stuck at her current job, and cannot change her wage or level of workplace safety. Marsha’s safety at work is at the lower level Sº, meaning that her actual utility level is Uº. In other words, Marsha had incorrect information about the offer curve. Specifically, while Marsha knew that she would earn a wage of w at the factory, she incorrectly believed that her workplace safety level would be S, which would have given her a utility level of U. Marsha took the job when she had imperfect information about how risky the job was. Marsha has recently moved to a new town and found a job in a factory where there is a risk of injury.
Offer Curve Wage W U U’ S S” Workplace Safety Consider Marsha, whose indifference curves are shown above in red. In this problem, you will explore these ideas graphically. However, government safety standards can be justified under hedonic wage theory if labor market imperfections are present. Under standard hedonic wage theory, government workplace safety laws are normally regarded as harming some employees.
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she could have moved to a point on the offer curve where her indifference curve (u) was tanget to the offer curve indicating that with meager loss of wages ww’ (i…View the full answerTranscribed image text: 6. Show transcribed image textAns (a) Marsha’s lack of information and mibilitiy caused her utility levels to be low. Offer Curve Wage W U U’ S S” Workplace Safety Consider
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