(Answered) Consider a competitive economy that has four different jobs

Management Studies

Consider a competitive economy that has four different jobs that vary by their wage and risk level. The table below describes each of the four jobs.

Job	Risk (r)	Wage (w)
A	1/5	$3
B	1/4	$12
C	1/3	$23
D	1/2	$25

All workers are equally productive, but workers vary in their preferences. Consider a worker who values his wage and the risk level according to the following utility function:

Where does the worker choose to work? Suppose the government regulated the workplace and required all jobs to have a risk factor of 1/5 (that is, all jobs become A jobs). What wage would the worker now need to earn in the A job to be equally happy following the regulation?

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