A firm has the choice of offering "dirty" jobs that are likely to cause severe health problems for its workers or of offering "clean" jobs by installing safety equipment at a cost of $5 per hour per employee that will substantially reduce the chances of health problems. The firm will
A. install the safety equipment if workers can ascertain whether they are working a dirty or a clean job.
B. never willingly choose to install the costly safety equipment.
C. willingly install the safety equipment if workers are willing to be paid $7 per hour less in a clean job than in a dirty job.
D. install the safety equipment if workers are willing to be paid $3 per hour less in a clean job than in a dirty job.
E. never install the safety equipment without a government subsidy to do so.
Answer: C
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Compared to a perfectly competitive industry, a single-price monopoly with the same costs will
A) create less consumer surplus. B) create less economic profit. C) create a deadweight loss. D) Both answers A and C are correct.
If an economist states that not enough of a good is being produced, she usually means that
A) not everyone can afford the good. B) price exceeds marginal cost. C) consumer surplus equals zero. D) at equilibrium, some people who still wish to sell the good cannot find a buyer.