Chapter 08 - Lecture Outline

Chapter 08 - Lecture Outline - ChapterEight...

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Chapter Eight Compensating Wage Differentials Chapter 8 1
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Theory of Compensating Wages Factors affecting compensation for wages: Agreeableness/disagreeableness of job Ease/difficulty and cost of learning job Turnover in a particular job Degree of power and trust held Probability or improbability of success in job Safety risks involved in performing the job Chapter 8 2
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Compensating Wages and  Safety Isoprofit Schedule (IP): Combinations of wages and safety that the firm  can provide and maintain the same level of profit IP curve exhibits a diminishing marginal rate of  transformation between wages and safety Lower curves imply higher levels of profits Chapter 8 3
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Isoprofit Schedule Chapter 8 4 A Firm is providing little safety and can provide additional safety in a relatively inexpensive manner B Firm is providing considerable safety and can provide additional safety only through the introduction of more sophisticated and costly procedures Wage Safety I h I o
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Chapter 08 - Lecture Outline - ChapterEight...

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