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Suppose that all workers value a 1% reduction in the workplace injury rate at $1,000. The cost of reducing the injury rate by 1% is $200 per worker. Firms currently pay $20,000 per year to workers, without any effort to improve safety. Suppose new firms began to offer workers $19,500 and a 1% reduction in the injury rate. The new firms would find that

A. their costs of wages and injury reduction exceed the costs of the existing firms.

B. only injury prone workers would apply.

C. workers would be willing to accept their offer.

D. no workers are applying for their jobs.


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