If a worker is indifferent between a job with a wage of $12 per hour and a job with a wage of $15 per hour,then the
A)higher-paying job enjoys a compensating wage differential of $3 per hour.
B)higher-paying job enjoys a compensating wage differential of $15 per hour.
C)higher-paying job is intrinsically more attractive than the lower-paying job.
D)worker's preferences are not rational.

Question

Quizplus · Accepted Answer

The worker's indifference between the two jobs means that they perceive the extra $3 per hour in wage as being compensated for by some other aspect of the lower-paying job, such as a better work environment or more flexible schedule. Therefore, the higher-paying job enjoys a compensating wage differential of $3 per hour.

If a Worker Is Indifferent Between a Job with a Wage