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Gold mining is very dangerous and firms often buy specialized safety equipment to make the job safer. The first graph shows the labor market for gold miners and the second graph shows the marginal cost (MC) for the firm for safety equipment. For each unit of safety equipment that the firm buys, they can reduce the premium they pay to their laborers by 10% of the wage in the labor market. 1. Show the effect of an increase in worker productivity by shifting the appropriate curve in the first graph. 2. In the second graph, show the effect of the change in gold miner wages on the marginal benefit of the safety equipment by placing the two marginal benefit (MB) curves appropriately.

Gold mining is very dangerous and firms often buy specialized safety equipment to make the job safer. The first graph shows the labor market for gold miners and the second graph shows the marginal cost (MC) for the firm for safety equipment. For each unit of safety equipment that the firm buys, they can reduce the premium they pay to their laborers by 10% of the wage in the labor market. 1. Show the effect of an increase in worker productivity by shifting the appropriate curve in the first graph. 2. In the second graph, show the effect of the change in gold miner wages on the marginal benefit of the safety equipment by placing the two marginal benefit (MB) curves appropriately.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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How much safety equipment will be purchased before the increase in productivity? How much safety equipment will be purchased after the increase in productivity? safety equipment: safety equipment: units units .
Transcribed Image Text:How much safety equipment will be purchased before the increase in productivity? How much safety equipment will be purchased after the increase in productivity? safety equipment: safety equipment: units units .
Gold mining is very dangerous and firms often buy specialized safety equipment to make the job safer. The first graph shows the labor market for gold miners and the second graph shows the marginal cost (MC) for the firm for safety equipment. For each unit of safety equipment that the firm buys, they can reduce the premium they pay to their laborers by 10% of the wage in the labor market. 1. Show the effect of an increase in worker productivity by shifting the appropriate curve in the first graph. 2. In the second graph, show the effect of the change in gold miner wages on the marginal benefit of the safety equipment by placing the two marginal benefit (MB) curves appropriately. Wage (5) 88 22889RR2. 100 90 80 10 Supply Demand 100 200 300 400 500 600 700 800 900 1,000 Quantity of labor Cost or benefit (5) 10 9 a 2 1 0 MB before 2 MB after 3 4 5 6 Quantity of safety equipment 8 MC
Transcribed Image Text:Gold mining is very dangerous and firms often buy specialized safety equipment to make the job safer. The first graph shows the labor market for gold miners and the second graph shows the marginal cost (MC) for the firm for safety equipment. For each unit of safety equipment that the firm buys, they can reduce the premium they pay to their laborers by 10% of the wage in the labor market. 1. Show the effect of an increase in worker productivity by shifting the appropriate curve in the first graph. 2. In the second graph, show the effect of the change in gold miner wages on the marginal benefit of the safety equipment by placing the two marginal benefit (MB) curves appropriately. Wage (5) 88 22889RR2. 100 90 80 10 Supply Demand 100 200 300 400 500 600 700 800 900 1,000 Quantity of labor Cost or benefit (5) 10 9 a 2 1 0 MB before 2 MB after 3 4 5 6 Quantity of safety equipment 8 MC
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