Question: Susan has a utility function with preferences given by U (w, p) = w - 4 p1/2 [p1/2means the square root of p so the

Susan has a utility function with preferences given by U (w, p) = w - 4 p1/2

[p1/2means the square root of p so the equation is [w minus (four times the square root of p)] where w is the hourly wage she is paid and p is the probability of a fatal injury occurring on the job.In her occupation, firms offer wages given by w = 12 + 50p.

She is offered a job at different firms, one that has taken many safety precautions such that p = 0.02 and one at a more dangerous firm with p = 0.05.What is the wage offered by each firm?

Given her preferences, which job is preferable to Susan?

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