Reference no: EM131259981

Suppose initially that all workers in an economy have the same preferences over wages(w) and the risk of death (d) (i.e. they have the same indifference curves). There aretwo jobs in the economy: farmer and coal miner. Farmers get paid $50,000 a year andhave a probability of death of 1 in 10,000. Coal miners get paid $52,000 and have aprobability of death of 1 in 5,000. If this is the case, how much are individuals in thiseconomy willing to pay to lower their probability of death on the job by 1 in 10,000?13. Now suppose that those who end up being farmers and those who end up being coalminers have different preferences: those who become farmers are more risk averse (i.e.they dislike risk more) than those who become coal miners. Wages (w) and risk ofdeath (d) are the same as in Part #2. In a graph with risk of death (d) on the X-axisand wages (w) on the Y-axis, show how the indifference curves (in terms of their slopes)compare for the two types of individuals.