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In: Economics

Suppose that, ceteris paribus, jobs differ according to the amount of on-the-job stress a worker faces....

Suppose that, ceteris paribus, jobs differ according to the amount of on-the-job stress a worker faces. An upward sloping hedonic wage function will exist relating the wage rate to the level of job stress if: A. workers prefer less stressful jobs. B. it is costly for firms to reduce job stress. C. workers are able to move among jobs with different levels of stress. D. All of the above are correct. E. None of the above is correc

Solutions

Expert Solution

Option E.

  • Hedonic wage function demonstrates the relationship that exist between wage rate and the job stress that workers face.
  • It is usually upward sloping which shows that the wages of workers increase when they are ready to undertake some slightly riskier job.
  • The workers usually choose that combination of wage risk which maximizes their utility and gives them more wages than other combinations.

Rahul Sunny answered 2 years ago
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