Answer:
$154,182.02
Explanation:
Probability of Farm workers in ( O.F ) facing death at work = 1/85 = 0.012
Probability of Farm workers in ( V.F ) facing death at work = 1/127 = 0.008
Value of a statistical life = $1,262,558
<u>Determine how much the workers in less risky job should get paid </u>
The less risky job is working in Valley farm(V.F ) with a death probability of = 1/127 = 0.008
The more risky job is working in valley farm ( probability = 1/85 = 0.012 )
Yearly wage of risky job = $159106
payment for less risky job can be calculated using the relation below
statistical life = ( cost incurred to reduce risk) / ( percentage of risk to death reduced ) ---------------- ( 1 )
cost incurred to reduce risk = yearly wage to high risk workers - yearly wage to low risk workers
= 159106 - X
percentage of risk to death reduced = (probability of death to high risk workers) - ( probability of death to low risk worker )
= 1/85 - 1/127 = 0.0039
back to relation 1
1262558 = ( 159106 - X ) / ( 0.0039)
159106 - X = 1262558 ( 0.0039 )
hence X ( amount to be paid to workers in the less risky job )
X = 159106 - 4923.9762 = $154,182.02
