A Firm Has the Choice of Offering "Dirty" Jobs That

question 28

Multiple Choice

A firm has the choice of offering "dirty" jobs that are likely to cause severe health problems for its workers or of offering "clean" jobs by installing safety equipment at a cost of $5 per hour per employee that will substantially reduce the chances of health problems.The firm will

• A)install the safety equipment if workers can ascertain whether they are working a dirty or a clean job.
• B)install the safety equipment if workers are willing to be paid $3 per hour less in a clean job than in a dirty job.
• C)never willingly choose to install the costly safety equipment.
• D)never install the safety equipment without a government subsidy to do so.
• E)willingly install the safety equipment if workers are willing to be paid $7 per hour less in a clean job than in a dirty job.

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Definitions:

Underwriters

Financial specialists who assess and undertake the risk of another party for a fee, often in the context of issuing insurance policies or investment securities.

Discount

A reduction in the price of goods or services usually to encourage sales or to reward specific groups of customers.

Premium

In finance, a premium refers to the amount by which the price of a financial asset or insurance policy exceeds its intrinsic or face value.

Recorded

The act of entering financial transactions into the accounting records of a company.