Question

12. (This question refers to the MRU video 'Compensating Differentials'.) The greater the wage differential required to compensate workers for a safety risk, the:

Select one:

a. weaker the firm's incentive to invest in making the job safer.

b. greater the difference between the level of skill required for safe jobs and the level of skill required for unsafe jobs.

c. greater the firm's incentive to invest in making the job safer.

d. smaller the difference between the wages of safe jobs and the wages of unsafe jobs.

15. (This question refers to the MRU video 'Compensating Differentials'.) All else equal, a job that is more fun is likely to:

Select one:

a. be safer.

b. pay more.

c. pay less.

d. require a high level of education.

19. Aside from your skills and how hard you work, what does your marginal product of labor reflect?

Select one:

a. your chance of death on the job

b. nothing

c. the productivity of everyone else in your economy

d. your supply of labor

Answer 1

12 Option C

Employers have many incentives to make workplaces safe. Workers demand compensating differentials (i.e., wage premiums) for the risks they face. The extra pay for job hazards, in effect, establishes the price employers must pay for an unsafe workplace.

15. Option C

Fun jobs tend to pay less. The compensating wage differential depends on how much income is necessary to compensate for unpleasant working environment. So, more easy and less stressful jobs mostly pay less.

19. Option C

Marginal product of labor is the change in output when additional labor is added, such as when an additional employee is hired, keeping all other factors remain constant. Assuming that the firm is operating with diminishing marginal returns then the addition of an extra worker reduces the average productivity of every other worker and every other worker affects the marginal productivity of the additional worker. Marginal Revenue Product of Labour = Marginal Product of Labor * Price. (MRPL = MRP * Price). Any variable that affects MPL or Price will affect MRPL.