Consider the Diagram for a Labour Market in Which the Relevant

question 9

Multiple Choice

Consider the diagram for a labour market in which the relevant job attribute is job safety. Why are the isoprofit curves concave, i.e., bowed in towards the origin?

• A) Because paying higher wages and providing a safer environment for the workers are both costly for the employer
• B) Because the marginal rate of transformation between wages and safety is increasing as a firm introduces more sophisticated safety procedure.
• C) Because a firm's profit decreases if it provides a safer environment for the workers.
• D) Because there is a negative trade-off between job safety and wages
• E) Because the marginal rate of transformation between wages and safety is decreasing as a firm introduces more sophisticated safety procedure.

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Definitions:

Altruistic Motives

Reasons behind actions that are primarily concerned with the welfare or benefit of others, without personal gain.

Reciprocity

A social norm of responding to a positive action with another positive action, rewarding kind actions.

Empathy

An emotional response to others as if we ourselves were in that person’s situation; feeling pleasure at another’s pleasure or pain at another’s pain.

Responsible

The state or quality of being accountable or to blame for something, often involving obligations to act ethically and sensibly.