Question

4. Suppose jobs vary along two dimensions: wages and noise, and that all workers dislike noise but vary in their distaste for it. Assume that the combinations of wages and noise for which firms' profits are zero are given by the equation W- 5 +.1N (for 0SN 100) where W is the wage in dollars per hour and Nis the noise the worker is subjected to, in decibels. Also, assume at the jobsite of any firm that spends nothing on noise reduction N- 100. a. Draw the offer curve b. Assume two employed workers, Manny and Moe. Assume that at Moe's jobsite workers are subject to 50 decibels of noise and at Manny's workers are subject to 75 decibels. Draw one indifference curve for Manny and another for Moe, representing their respective utilities at their respective jobs. What are these workers' wages? Which worker has a greater willingness to pay for a one decibel reduction in noise at the wage-decibel combination of $10 and 50 decibels? At their current wages and levels of noise, how much wage is Manny willing to give up to reduce noise by one decibel? How much wage is Moe willing to give up to reduce noise by one decibel? c. d. For a very relevant recent paper on this topic, see Tempe, The long-run impacts of America's first Suppose OSHA sets a cap of 50 decibels at all jobsites. How does this cap affect Manny's and Moe's employment choices? How does the cap affect Manny's and Moe's well-being? Assume again no OSHA and no cap. Suppose firms to reduce or eliminate noise. What does the new offer curve look like? What would be the new combinations of wage and noise chosen by Manny and Moe? Are they better off at these new combinations of wage and noise? Are their employers better off e. f. it becomes costless for