First, ignore the attached figure. Suppose there is only one firm (a monopolist) and that all workers have identical wage-safety preferences. Workers are receiving a wage of $5.1 and a safety level of 5, and the firm is making a profit of $117.

A. Draw a graph that accurately depicts this situation. Label the firm's isoprofit line as π117.

B. If the workers are in a union and decide to go on strike, it will cost the firm $30. Draw a line representing the isoprofit line the firm will be on if the union strikes. Label it as πS. If the strike occurs, the firm's profit will be _________. Calculate the answer by reading the surrounding text.

C. True or False? Your answer must be numeric. For "true," enter "1." For "false," enter "0." There is more than one wage-safety combination that the union would prefer over the current combination: ____________. Calculate the answer by reading the surrounding text. There is more than one wage-safety combination the monopolist would prefer to offer rather than endure a strike: __________. Calculate the answer by reading the surrounding text.

Now suppose instead that the market is perfectly competitive and consider the attached figure with two types of workers and two types of firms. All workers in the industry have preferences described either by the blue indifference curves or the red indifference curves. Type 1 firms in the industry have isoprofit schedules that look like I1, and type 2 firms' isoprofit schedules look like I2.

D. For all firms, the level of profit everywhere on their isoprofit schedule is equal to ___________. Calculate the answer by reading the surrounding text.

E. Draw a graph showing only the offer curve.

F. The workers who are less risk-averse will work for firms of type _________. Calculate the answer by reading the surrounding text and receive a safety level of S= ______. Calculate the answer by reading the surrounding text and a wage of W= _________. Calculate the answer by reading the surrounding text.

10 W 9
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I1
12 6 7
0 0
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S