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QUESTION
The Environmental Protection Agency (EPA) wants to investigate the value workers place on being able to work in "clean" mines over "dirty" mines.
The Environmental Protection Agency (EPA) wants to investigate the value workers place on being able to work in "clean" mines over "dirty" mines. The EPA conducts a study and finds the average annual wage in clean mines to be $42,250 and the average annual wage in dirty mines to be $47,250.
- (a) (10 pts) According to the EPA, how much does the average worker value working in a clean mine?
- (b) (10 pts) Suppose the EPA could mandate that all dirty mines become clean mines and that all workers who were in a dirty mine must therefore accept a $5,000 pay decrease. Are these workers helped by the intervention, hurt by the intervention, or indifferent to the intervention?
