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the top creates greater utility. In this figure, no matter what point U3 is preferred to U2 and the same applies to the relationship between U2 and U1. The reason that all these curves increase (convex) is the normal marginal rate of substitution. In point K, the person receives quite high salary but is much risk involved in his daily work and while he has a high consumption of other goods. The person may be willing enough to give up pretty much in wage just to reduce the risks related to the job. Let the new point be called J, is now the person is less willing to give up salary to reduce risks at work because the risk of harm is not so impending anymore and his consumption is greatly reduced.

 

People are different and because of this, these indifference curves look different. If a person is more sensitive to injury at work, in other words is risk averse, the person's indifference curves will be steeper, but the people who do not have anything against injury at work or are risk lovers, their indifference curves be flatter. The more sensitive people will have much more for granted the percentage increase in the risk of injury, but the risk-lovers will not have paid so much when the risk of injury increases in their daily work (ibid: 250-251).

 

Employer considerations:

 

Employers stand before a trade-off between wages and risk. To reduce accidents shall use a lot of financial resources. Machines must be secured, work time must be adjusted and workwear must be purchased for employees. Second, because of competition, many companies continue operating even though with zero profit. And third, all job characteristics are given in advance and are certain. Due to these three reasons, if the company decides to reduce the risk of injury, they must also reduce wage in order to remain competitive.

 

Jobs with lower risk of danger are related to low-wage jobs and the jobs with higher risk of injury associated with higher wages. We assume other things are kept constant in both scenarios. This can be interpreted as when the company uses a lot of money to reduce risk and ensure the workplace better, they have to spend less money in other things in order to continue operations and remain competitive as well. This trade between wages and the level of injury cases can be viewed via the isoprofit curves. This can be seen in figure 2.

 

Isoprofit curves in this model are concave (curved inward). This can be explained that when the employer uses resources to reduce the risk of injury, these costs will result in declining marginal returns. Let’s assume that the company operates at the point M in figure 2. In this section, the risk of injury is quite high. If the company decides to reduce the risk of injuries to this point, because at the point M the curve is quite flat and reducing the risk can happen with the minimum cost and employer do not have to reduce wages to remain competitive and keep profits constant. Because 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。