Question

) In order for the compensating differential associated with a risky job to be negative (so...

) In order for the compensating differential associated with a risky job to be negative (so

that a risky job pays less than a non-risky job), it must be that

(a) many workers are willing to work the risky job for free.

(b) most workers prefer the risky job to the safe job when both wages are equal.

(c) the number of risky jobs is less than the number of workers who prefer the risky job.

(d) there is great demand for labor in both sectors.

(e) the government mandates that the wages in the two sectors be equa

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Answer #1

Solution:-option C is correct.

(c) the number of risky jobs is less than the number of workers who prefer the risky job.

Explaination:-In order for the compensating differential associated with a risky job to be negative (so that a risky job pays less than a non-risky job), it must be that  the number of risky jobs is less than the number of workers who prefer the risky job.Under normal circumstances, the equilibrium compensation wage differential is the wage differential that exactly attracts the marginal worker into a risky job.

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