The Slope of the Indifference Curve in a Hedonic Wage

question 8

Multiple Choice

The slope of the indifference curve in a hedonic wage model is the marginal rate of substitution (MRS) between consumption and the non-wage job attribute.Economically, this MRS is:

• A) the bribe that is necessary to completely compensate the worker for a unit increase
• In the non-wage job attribute.
• B) the increase in wage that a worker is willing to forgo for a 1 percent increase in
• His fatality risk.
• C) negative if the non-wage job attribute is a good.
• D) always equal to zero at the worker's utility maximizing point.
• E) increasing with age.

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Definitions:

Internal Rate of Return

The discount rate at which the net present value of an investment's cash flows equals zero, used as a metric to evaluate the profitability of potential investments.

Interest Rates

The cost of borrowing money or the return earned from lending money, typically expressed as a percentage of the principal.

Yearly Save

Yearly save refers to the amount of money or cost savings that an organization or individual aims to achieve within a one-year period.

Straight-Line Method

A method of calculating depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.