The hedonic theory of wages predicts that:

Question 10Answer

a.
workers and firms will be matched randomly, but in equilibrium firms will be maximizing profits and workers will be maximizing utility


b.
other things equal, workers who value job safety least will tend to work for firms that have the lowest cost of providing safe jobs


c.
other things equal, workers who value job safety least will tend to work for firms that have the highest cost of providing safe jobs


d.
other things equal, workers who value job safety most will tend to work for firms that have the highest cost of providing safe jobs