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 wage $5.65 and safety level 4, and the firm is making profit $103.

A. Draw a graph which accurately depicts this situation. Label the firm's isoprofit line ₁₀₃.

B. If the workers are in a union and decide to go on strike, it will cost the firm $21. Draw a line representing the isoprofit line the firm will be on if the union strikes. Label it _S. If the strike occurs the firm's profit will be ____________.

C. True of False? This answer must be numerical. Enter 1 for "true" and 0 for "false": There is more than one wage-safety combination that the union would prefer over the current combination:____________. There is more than one wage-safety combination the monopolist would prefer to offer rather than endure a strike: ____________.

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. Firms in the industry have isoprofit schedules that look either like I₁ or I₂.

D. For all firms, the level of profit everywhere on their isoprofit schedule is equal to ___________.

E. Draw a graph showing only the offer curve.

F. The workers who are less risk-averse will work for firms of type ________ and receive safety level S= _______ and wage W= ______ .

10 W 9 8 7 6 5 4 3 2 2 1 I1 I 2 0 0 1 2 3 4 5 6 7 8 9 10 S 10 W 9 8 7 6 5 4 3 2 2 1 I1 I 2 0 0 1 2 3 4 5 6 7 8 9 10 S