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1. Consider the figure below, which depicts the matching of jobs and workers. There are two jobs at firms X and Y and two workers A and B. Wage Rate B2 B A A2 WBY R WAX х 0 RAX R RBY Risk of Injury a. Which worker is more risk averse? A or B? Which job does he take? How much does he earn? What is the highest utility he can achieve given the job opportunities? b. Which firm has the higher cost of reducing risk? Whom will it employ? How much will it pay? What is the highest level of profits it can achieve given the labor force? c. Draw the hedonic wage function on the graph and explain what kind of information it contains d. What are the two main behavioral insights of the hedonic wage theory?