Suppose That All Workers Value a Safe Job $2,000/year More

question 13

Multiple Choice

Suppose that all workers value a safe job $2,000/year more than a risky job.The cost of safety is $700 per worker.Firms currently pay $35,000 per year to workers,without any effort to improve safety.
Suppose new firms began to offer workers $34,000 per year and safe jobs.The new firms would find that

• A)no workers are applying for their jobs.
• B)only lower quality workers would apply for their jobs.
• C)only injury prone workers would apply.
• D)workers would be willing to accept their offer.

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Definitions:

Direct Labor

Direct labor refers to the wages paid to workers directly involved in the manufacture of products or the provision of services.

Factory Overhead

All indirect costs related to manufacturing beyond direct materials and direct labor, including utilities, depreciation of factory equipment, and factory rent.

Process Cost System

An accounting method used to track cost related to processes or departments when mass-producing identical or similar products.

Work In Process Inventory

The value of partially completed goods or products that are in the process of being manufactured.