6. Answer these questions on the basis of the information in the accompanying table. The data are for a competitive firm.

a. What is the profit-maximizing level of job safety as viewed by the firm? Explain.

b. Assume that information is perfect and that workers accurately assess personal risk. What is the optimal level of job safety from society’s perspective? Explain.

c. Suppose government imposed a minimum safety standard of 5 units. Why would the firm object? Speculate about why some workers might object.

d. Suppose new technology reduced this firm’s marginal cost data to $1, $2, $3, $4, and $5 for the first through fifth units of safety. How would this firm respond

Transcribed Image Text:

Marginal Benefit from Safety $60 40 20 10 6 Amount of Safety Provided 1 2 Marginal Cost of Safety $1 3 3 6 9 15 45