George and Brad are waiters at a local restaurant. The female customers prefer to be seated at the tables that George waits on because they think George is better looking than Brad. If George earns more than Brad because of his better looks, this is an example of
A)effort playing a key role in wage differences.
B)differences in human capital.
C)a beauty premium.
D)a compensating differential.

Question

Quizplus · Accepted Answer

This is an example of a beauty premium, where George earns more because of his physical appearance, which is valued by the female customers. It is not due to differences in effort or human capital, as both George and Brad are waiters at the same restaurant and likely have similar levels of skill and experience. It is also not a compensating differential, as there is no evidence that George's job is more unpleasant or risky than Brad's.

George and Brad Are Waiters at a Local Restaurant