LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 4P
To determine
Determine the wage in dirty jobs and the amount of compensating wage differential.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A medical researcher is trying to cure a disease. For each unit of effort she puts into her work, she generates a utility benefit of 10 for each member of society. There are 1,000 people in society besides the medical researcher. The medical researcher doesn’t care about other people. She is in it for the glory. For each unit of effort she puts into her work, she gets a utility benefit of 1000 (which is inclusive of the 10 that she gets for being a member of society, plus a payoff of 990 in glory). If she exerts effort e, she also suffers cost e^2.
(a) Suppose a policymaker who was a committed utilitarian (including caring about the medical researcher’s glory, since the medical researcher cares about it) was to choose the level of effort the medical researcher exerts. That policymaker would add up the total utility in society (including the medical researcher’s utility) from any given level of effort and choose the level of effort that maximizes that aggregate utility.
i. What (social)…
A medical researcher is trying to cure a disease. For each unit of effort she puts into her work, she generates a utility benefit of 10 for each member of society. There are 1,000 people in society besides the medical researcher. The medical researcher doesn’t care about other people. She is in it for the glory. For each unit of effort she puts into her work, she gets a utility benefit of 1000 (which is inclusive of the 10 that she gets for being a member of society, plus a payoff of 990 in glory). If she exerts effort e, she also suffers cost e^2.
(a) The medical researcher’s payoff from exerting effort e is 1000e − e^2. What level of effort, e∗, will she exert?
(b) Suppose a policymaker who was a committed utilitarian (including caring about the medical researcher’s glory, since the medical researcher cares about it) was to choose the level of effort the medical researcher exerts. That policymaker would add up the total utility in society (including the medical researcher’s utility)…
The relationship between a worker’s daily wage, w, and her daily output, q, is q = 0.1 w2 - 0.0005 w3 so that the worker’s marginal product with respect to her wage is MPw = 0.2 w - 0.0015 w2. What is the optimal efficiency daily wage for the firm to pay? How much output will the worker produce each day? How much profit does the firm earn on the worker’s output each day if the price of output is fixed at $0.80 per unit?
Knowledge Booster
Similar questions
- A firm has a production function Y=150N^0.6. The real wage is W=30. The production process of this firm causes pollution. The government passes a law that requires the firm to stop polluting. This firm discovers that it can prevent pollution by hiring 0.2 additional workers for each worker in the production process to clean up. Let N denote the amount of labor hired on the production line. If the firm wants to maximize its profit, what should be the value of N?arrow_forwardSuppose that the social cost of crime, C(L), is a decreasing function of the number of police employed, L. Let the cost of maintaining the police force be wL, where w is the wage rate. (c) Show graphically how you would choose the efficient size of the police force. (Assume that the function C(L) is decreasing at a decreasing rate.) Use Google draw (lines and curves are the only functions you need). Afterward, download the image as JPEG and upload it into the question. (d) How will an increase in the wage rate of police officers affect the efficient amount of crime? Suppose the following information has been gathered on the enforcement of a speed limit on a particular highway over a holiday weekend: No. of speeders Probability of Expenditure on enforcement apprehension ( p) Еxpected fine (pf) $ 1,000 .1 2$ 1,000 10,000 .5 50 500 100,000 .9 100 100 1,000 5 (e) Suppose the goal is to limit the number of speeders to 500. What actual fine, f, and what probability of apprehension, p,…arrow_forwardTwo fish farmers are deciding how many fish to raise in a public access lake. The problem is that this lake is quite small and the oxygen and food needed for aquaculture is They quickly deplete if there are excess fish, thus reducing production. Let ya and yb the number of fish that each farmer raises. The unit value of each farmed fish is: V(ya, yb) = 200 − (ya + yb)2 (b) Find the private equilibrium of fish farming. Get the benefits of each aquaculturist and the added benefits.arrow_forward
- A recent trend in health insurance is the Health Savings Account (HSA). The idea behind Health Savings Accounts is that rather than providing employees with health insurance that makes visiting doctors cost little more than a simple $10 or $20 copay the employer gives the employee money to use to spend on health care, but the employee bares the entire cost of seeing the doctor. What money given for health care not spent by the employee can be withdrawn by the employee as if it was additional income. It is believed that Health Savings Accounts will reduce the total amount of money spent on seeing doctors. Using Supply and Demand analysis, explain why there is the expectation that HSA’s will reduce spending on doctors.arrow_forwardSuppose five people have houses on the same small lane. They all individually benefit from regular maintenance of the lane. Their individual marginal benefit curves are P = 8 ― (1/10)Q, where P reflects a willingness to pay in thousands and Q is the length of the road repaired in ten-yard units. The cost of maintenance is $2,000 per ten yards. Suppose one person is currently the only one paying for maintenance. How much does this person buy, and what is the deadweight loss? Does anyone individually have an incentive to pay for additional maintenance, and why or why not?arrow_forwardThere is a road between the suburbs and downtown. The road is congested at rush hour. If 172 people use the road at rush hour, the trip takes 38 minutes. If one additional person enters the road, everyone has to slow down and the trip now takes 39 minutes. People value their time at $6 per hour (that is, 50.10 per minute). For simplicity, ignore all of the costs of using the road other than the cost of time. The total social cost of 172 people using the road at rush hour is S1 (Round your response to the nearest dollar.) The marginal social cost of onea additional person is S (Round your response to the nearest dollar.) The efficient toll on this one additional person (that is, the cost he imposes on other drivers) is S (Round your response to the nearest dollar.) Suppose at noon 50 people are using the road. The road is not congested and the trip takes just 20 minutes. If one additional driver enters the road, no one has to slow down and the trip continues to take 20 minutes. The toll…arrow_forward
- Suppose that a surfboard designer owns a building and is renting part of the building's space to a doctor. Further suppose that because the surfboard designer is the owner, he has the right to make noise during the day while he sands the boards. While the doctor cannot insist on a quiet environment, the doctor could move to a quieter building. However, rent in the next best building is $400/month more than rent in the noisy building. The surfboard designer can adopt a new technology that eliminates the noise for $325/month. Given this situation, can the doctor find a private solution with the surfboard designer that will make both better off? What is the minimum and maximum payment the doctor would make to the surfboard designer to get the doctor to install the noise-reducing equipment? NOTE: Round your answers to the nearest dollar. Minimum: $ Maximum: $arrow_forwardSuppose there are two different neighborhoods in a city. One neighborhood has 400 Black residents and 600 white residents. The other neighborhood has 800 Black residents and 400 white residents. What is the Dissimilarity Index (DI) equal to?arrow_forwardMarie is a manager at an electronics store, and she has to decide how many workers to hire. If she hires one worker, her revenue is $400 per day. If she hires another worker, she can make another $350 per day. The marginal benefit of hiring another worker decreases by $50 with each additional hire. Assuming that workers are paid $20 per hour and work eight hours, how many employees should Marie hire, and what will be the total revenue of her store? She will hire four workers and the revenue of the store will be $1,300. She will hire five workers and the revenue of the store will be $1,500. She will hire six workers and the revenue of the store will be $1,650. O She will hire seven workers and the revenue of the store will be $1,750.arrow_forward
- Check my work Your neighbor never mows her lawn. You don't have any legal right to force her to mow, but the mess in her front yard is making your neighborhood unsightly and reducing the value of your house. The reduction in the value of your house is $5,000, and the value of her time to mow the lawn once a week is $1,000. Suppose you offer her a deal in which you pay her $3,000 to mow. How does this deal affect surplus? The deal increases both your surplus and your neighbor's. The deal increases your surplus but decreases your neighbor's. The deal does not affect surplus. The deal increases your neighbor's surplus but decreases yours. The deal increases only your neighbor's surplus. The deal increases only your surplus.arrow_forwardSuppose that there are exactly two types of workers in LA: A’s and B’s. A’s earn a firm $15 in revenue (in their lifetime) and B’s earn a firm $10 in revenue (in their lifetime). There are equal numbers of each type of worker in LA. Firms cannot distinguish between the two types of workers. Even after a firm has hired them, the firm won’t be able to monitor their work closely enough to determine which workers are of which type. Workers prefer a higher wage to a lower wage and workers supply their labor (to the highest possible wage they can get) as long as this wage is positive. A firm pays a worker a wage equal to the expected amount of revenue the worker earns for the firm (in his/her lifetime). Workers are risk neutral. Question 15 : What is the wage (per lifetime) that a type A worker receives? What is the wage (per lifetime) that a type B worker receives?arrow_forwardLet: U1 = x1 + z^.5, Y1 = x1 + pz1 %3| %3D U2 = x2 - .5z^.5, Y2 = x2 + pz2 %3D z = z1 + z2, Y is the income of the agent, and p is the price of z1 and z2. What is the social-optimal amount of z1 and z2? What is the optimal amount of z1 agent 1 would choose given z2, and vice versa? What can the social planner do so that the agents choose the socially optimal level of z1 and z2? How much is needed to achieve the social-optimal amount?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education