Consider the demand for and supply of risky jobs. (a) Derive the algebra that leads from equations
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(a) Derive the algebra that leads from equations (5-4) and (5-5) to equation (5-6).
(b) Describe why the supply curve in Figure 5-2 is upward sloping. How does your explanation incorporate θ? Why?
(c) Using a graph similar to Figure 5-2, demonstrate how the number of dirty jobs changes as technological advances allow the cost of making worksites cleaner to fall for all firms.
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a 54 0 p 0 E w 0 E 55 1 p 1 E w 1 E Now 1 0 p 1 E w 1 E p 0 E w 0 E p 1 p 0 E w 0 w 1 E w 0 w 1 E This difference in profits therefore is positive whi...View the full answer
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