Suppose That All Workers Value a 1 Percent Reduction in the Workplace

question 96

Multiple Choice

Suppose that all workers value a 1 percent reduction in the workplace injury rate at $1,000 per year. The cost of reducing the injury rate by 1 percent is $200 per year for each worker. Firms currently pay $20,000 per year to workers, without any effort to improve safety. If new firms began to offer workers $19,500 and a 1 percent reduction in the injury rate, then:

• A)no workers would be willing to work at the new firms.
• B)the new firms would not be able to compete with the existing firms.
• C)workers would want to work at the new firms.
• D)only injury prone workers would want to work at the new firms.

---

Definitions:

Pure Monopoly

An economic situation where only one supplier dominates the entire market offering for a specific commodity or service, with no nearly identical alternatives available.

Price Maker

A firm with the power to influence the price at which it sells its product, typically because it does not face significant competition.

Purely Monopolistic

A market structure where a single supplier has exclusive control over the production and sale of a unique product without close substitutes, leading to significant market power.

Downsloping Demand Curve

A graphical representation in economics showing that as the price of a good or service decreases, the quantity demanded increases, and vice versa.