Suppose That All Workers Value a 1 Percent Reduction in the Workplace

Multiple Choice

Suppose that all workers value a 1 percent reduction in the workplace injury rate at $1,000 per year. The cost of reducing the injury rate by 1 percent is $200 per year for each worker. Firms currently pay $20,000 per year to workers, without any effort to improve safety. If new firms began to offer workers $19,500 and a 1 percent reduction in the injury rate, then the total annual cost of hiring a worker would be ______ at the new firms and ______ at the existing firms.

A) $19,500; $20,000
B) $18,500; $20,000
C) $19,500; $19,800
D) $19,700; $20,000