homework_5_compensating_wage_differentials

# homework_5_compensating_wage_differentials - ,Davis...

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University of California, Davis Dr. Janine L.F. Wilson Department of Economics Fall 2009 Economics 151a Homework 5 Compensating Wage Differentials 1. There is a mythical town in the United States called Dirkville where 100,000 people live  and there are no visitors or out-of-town guests.  The average salary for the people of  Dirkville is \$50,000.   a. An intersection on a busy street in a town called Dirkville is governed by stop  signs for the traffic coming from two of the four directions.  Each year, 2 of the  100,000 people that live in Dirkville are killed as a result of accidents in the  intersection.  Studies have shown that if a stoplight was installed in the  intersection the death rate would fall to 1 in 100,000 people that live in Dirkville.  Installing the stoplight would cost each citizen of Dirkville 1% of their salary in  time lost and maintenance.  What would be the minimum statistical value of a life

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