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

question 121

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 safer jobs.The total benefit to workers of the existing firms' offer is __________ and the benefit of the new firms' offer is __________.

• A)$0;$1,000
• B)$1,000;$1,000 00
• C)$33,000;$34,000
• D)$35,000;$36,000

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Definitions:

Machine-Hours

The total time machines are operated within a certain period, often used to allocate manufacturing overhead.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of goods, such as salaries of supervisors and the cost of factory utilities.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a specific activity base.

Machine-Hours

A measure of production or work volume that indicates the amount of time a machine has been operating.