a) The labor supply curve for risky jobs rotates up in comparison to the supply curve for safe jobs. The wedge would be $1 at the first labor input, $2 at the second labor input and so on up to $100 at the one hundredth labor input. To know what effect this will have on the equilibrium wage differential between safe and risky jobs, we have to know the shape of the value of marginal product (VMP) curve, which is the demand curve for labor. The question implies that 10 units of labor are always hired by the risky firm. This suggests that the labor demand curve for risky workers in a vertical line at 10 units of labor. In other words, the risky firm will always hire 10 workers and will pay the minimum amount necessary to get 10 workers who are willing to work in the risky sector. In that case, the equilibrium wage differential will be $10, which is the differential required to get the tenth labor unit. This assumes that the risky firm pays all risky workers the same wage. That is, it is not able to wage-discriminate and capture the labor surplus earned by labor units 1 through 9.

We assume throughout that all workers are equally productive. Then, the workers that will be employed by the cost-minimizing risky firm will be the ten who have the lowest risk premiums. That is, the first 10 labor units, who have risk premiums ranging incrementally from $1 up to $10, will be hired by the risky firm.

b) As a result of the advertising campaign, the labor supply curve for the risky firm described in part (a) would shift down by $10 at each unit of labor input. The new labor supply curve for the risky firm would be parallel to and below the old curve for that firm. It would intersect the labor demand curve for risky workers at a wage $10 below the risky wage that would have applied before the advertising campaign. Therefore, the equilibrium wage for the risky firm would be exactly the same as if it was a safe firm.