Suppose the wage rate that is paid at a particular firm is W = 5 + 0.5T, where T =

the number of years that the worker has been employed at the firm. The marginal revenue product, which is measured in dollars per hour, is MRPL = 6 + 0.3T.

Assume that the wage is high enough to attract workers from alternative jobs.

a. Ignoring the discounting of future values to the present, graph the wages and MRP_L over a period of 12 years.

b. Would this pay scheme be more attractive to

(a) a worker who is looking for stable employment with the same firm for the next 12 years or

(b) a worker who plans to move to another geographic area in six years, which would necessitate leaving his or her job?

Explain.