Question 1

The statement that "night shift workers make a higher wage than day shift workers" is likely to reflect the fact that
A)most people's preference is to work the day shift.
B)some people prefer to work a night shift for nonmonetary reasons.
C)night shift jobs are generally more technically difficult.
D)more women than men work the night shift.

Accepted Answer

The answer of The statement that "night shift workers make...

Question 2

On average, electricians who work on dangerous high-voltage power lines earn more per hour than similarly skilled electricians who don't work on dangerous high-voltage power lines. The difference in pay is attributed to
A)the marginal product of labor.
B)the marginal product of capital.
C)diminishing marginal returns.
D)a compensating differential.

Accepted Answer

The difference in pay is due to a compensating differential, which is the extra pay workers receive for engaging in risky or unpleasant work. Since working on dangerous high-voltage power lines comes with a higher level of risk, electricians who work on these lines receive a compensating differential in the form of higher pay.

Question 3

As a summer job, some teenagers choose to detassle corn, a job requiring long hours walking corn fields in the summer heat. Other teens take jobs working as lifeguards. Given that detassling corn is a more difficult job than working as a lifeguard, we would expect a difference in wages between the two jobs. This difference is known as
A)an efficiency wage.
B)a compensating differential.
C)a wage adjustment.
D)a minimum wage.

Accepted Answer

The difference in wages between detassling corn and working as a lifeguard is an example of a compensating differential. This is because detassling corn is a more difficult and unpleasant job, so workers require higher wages as compensation. Lifeguarding, in contrast, is a less difficult and more enjoyable job, so workers do not require as high of wages.

Question 4

Sally and Harry both work at the local factory producing cars. Sally earns $22 per hour working the day shift, and Harry earns $25 per hour working the night shift. Sally and Harry do the same job, have the same experience, and have the same level of education. This means that the
A)higher-paying job has a compensating wage differential of $3 per hour.
B)higher-paying job has a compensating wage differential of $25 per hour.
C)higher-paying job is intrinsically more attractive than the lower-paying job.
D)factory is discriminating against Sally because she is a woman.

Accepted Answer

The compensating wage differential is the extra amount of pay that one job offers over another to attract workers to the less desirable job. In this case, the night shift is less desirable due to the less desirable hours and lifestyle impact, so the factory offers a higher wage to attract workers to that shift. The $3 per hour difference between Sally and Harry's wages is an example of a compensating wage differential.

Question 5

The term "compensating differential" refers to
A)the fact that workers who do similar work should be paid the same wage.
B)the fact that some workers live further from their jobs than do other workers.
C)a wage difference that is due to unionization of some firms but not others.
D)a wage difference that arises from nonmonetary characteristics of different jobs.

Accepted Answer

A compensating differential refers to a wage difference that arises from nonmonetary characteristics of different jobs. For example, jobs that are more dangerous, require longer hours or involve working in undesirable conditions may pay more to compensate workers for the additional challenges they face.

Question 6

A compensating differential is
A)a difference in pay due to nonmonetary characteristics of different jobs.
B)a high wage paid by employers to entice workers to be more productive.
C)the difference between the quantity of labor supplied and the quantity of labor demanded at the minimum wage.
D)due only to difference in the productivity of workers with different skills.

Accepted Answer

A compensating differential refers to the difference in pay between jobs that arises due to nonmonetary characteristics such as working conditions, job security, or other job-related factors. It is not related to productivity or the minimum wage.

Question 7

Construction work is much riskier than working as a server at a restaurant. As a result, we'd expect a difference in wages between the two jobs. The difference is known as
A)an efficiency wage.
B)a compensating differential.
C)a wage adjustment.
D)a minimum wage.

Accepted Answer

A compensating differential is a difference in wages that arises due to differences in the risk associated with a particular job. In this case, the construction job is riskier, so we'd expect workers in that job to receive higher wages than servers at a restaurant. An efficiency wage is a wage paid that is higher than necessary to keep workers motivated and productive, often used to reduce employee turnover. A wage adjustment can refer to any change in wages, but doesn't specifically address differences in risk. A minimum wage is a legal requirement for a minimum amount of pay for certain types of work, but doesn't address differences in risk between different jobs. Therefore, the best choice is B.

Question 8

A difference in wages that reflects differences in the nonpay features of two jobs is called
A)a compensating differential.
B)a wage adjustment.
C)an efficiency wage.
D)a minimum wage.

Accepted Answer

A compensating differential refers to the wage difference between two jobs that reflects the differences in nonpay features, such as job flexibility, job security, work environment, and benefits. For example, a job with a higher risk of injury may pay more than a job with lower risk to compensate for that risk.

Question 9

Factory workers who work the day shift earn less per hour than similarly-skilled factory workers who work the night shift. The difference in pay is attributed to
A)the marginal product of labor.
B)the marginal product of capital.
C)diminishing marginal returns.
D)a compensating differential.

Accepted Answer

A compensating differential is a difference in wages that reflects the different working conditions or environments of different jobs. In this case, working the night shift may be less desirable due to the disruption of normal sleep patterns, so workers demand a higher wage to compensate for this inconvenience.

Question 10

Many kindergarten teachers have advanced education degrees, yet they have lower average earnings than other individuals with similar education levels. A potential explanation for the differences in earnings is that kindergarten teachers
A)have more pleasant working conditions.
B)have less pleasant working conditions.
C)work longer hours.
D)must pass certification tests.

Accepted Answer

The answer of Many kindergarten teachers have advanced education degrees,...

Question 11

Wages of doctors tend to be higher than wages of bankers. Which of the following is a compensating differential explaining the difference in wages?
A)Doctors have the stress of being responsible for other peoples' lives while bankers do not.
B)Doctors are on call to work nights and weekends, while bankers work traditional business hours.
C)Doctors must pay for malpractice insurance in case they are sued for a mistake on the job.
D)All of the above are compensating differentials.

Accepted Answer

All of the above are compensating differentials. Doctors' higher wages can be attributed to the additional stresses and responsibilities of their job, their requirement to work non-traditional hours, and the need to protect themselves from potential malpractice lawsuits.

Question 12

Suppose that a company hires recent college graduates for two types of jobs, sales people and credit analysts. The hours worked and skill levels are the same for both positions. The sales people get to travel to several desirable locations, whereas the credit analysts do not leave the home office. When comparing the salaries of the two positions, it is likely that the company pays the
A)sales people less as a compensating differential.
B)credit analysts less as a compensating differential.
C)same salary for both positions because they require the same skill level.
D)same salary for both positions because it would be illegal to do otherwise.

Accepted Answer

Sales people might be paid less as a compensating differential because the opportunity to travel to desirable locations can be seen as a form of non-monetary compensation that makes up for the lower salary.

Question 13

Which term do economists use to refer to a difference in wages that arises from nonmonetary characteristics of different jobs?
A)non-pecuniary differentials
B)compensating differentials
C)fundamental differences
D)idiosyncratic differences

Accepted Answer

The answer of Which term do economists use to refer...

Question 14

Suppose that a company hires recent college graduates for two types of jobs, sales people and credit analysts. The hours worked and skill levels are the same for both positions. The sales people must "cold call," which many people find to be unpleasant. When comparing the salaries of the two positions, it is likely that the company pays the
A)credit analysts more as a compensating differential.
B)sales people more as a compensating differential.
C)same salary for both positions because they require the same skill level.
D)same salary for both positions because it would be illegal to do otherwise.

Accepted Answer

The answer of Suppose that a company hires recent college...

Question 15

Since people get sick at all hours of the day, some nurses who work in hospitals are required to work the night shift. In most cases, the nurses who work the night shift earn a higher hourly wage for the same work as the nurses who work the day shift. This difference in pay is referred to as a
A)discriminatory wage practice.
B)compensating differential.
C)wage inequity.
D)a market inefficiency.

Accepted Answer

The difference in pay for nurses who work the night shift is referred to as a compensating differential, which is a wage premium paid to workers who undertake less desirable work or shifts. It is not discriminatory wage practice because the difference in pay is based on the shift worked rather than personal characteristics of the nurse. Wage inequity and market inefficiency are also not accurate descriptions of this situation.

Question 16

Nurses who work in hospitals often are required to work on weekends, whereas nurses who work in doctors' offices generally only work Monday through Friday. Hospital nurses who must work on weekends are usually paid more than nurses working in doctors' offices for the same work even if they have the same skills and education. This difference in pay is attributed to
A)an efficiency wage.
B)compensating differential.
C)differences in the marginal product of labor.
D)differences in human capital.

Accepted Answer

The difference in pay is due to compensating differential, which is the difference in pay to offset the less desirable aspects of a job, such as working on weekends. This is not an efficiency wage as there is no evidence suggesting that nurses are being paid more to increase their productivity. It also does not relate to differences in marginal product of labor or human capital as the skills and education levels are the same.

Question 17

Workers who work the night shift are often paid more than those who do identical work on the day shift. This is referred to as a
A)discriminatory wage practice.
B)compensating differential.
C)wage inequity.
D)a market inefficiency.

Accepted Answer

The practice of paying workers more for working the night shift is a compensating differential. This is because working the night shift is often less desirable due to the disruption of sleep patterns and social life, and the higher pay serves as compensation for these inconveniences. The other options do not accurately describe this scenario.

Question 18

Which of the following is not an example of a compensating differential?
A)Chris is a consultant who is paid more than other workers with similar skills because he is required to travel 80% of the time.
B)Abby is a teacher who is paid less than other workers with similar skills because she does not have to work during the summer months.
C)Ben is a businessman who is paid more than other workers with similar skills because he graduated from a prestigious university with honors.
D)Daphne is a skyscraper window-washer who is paid more than other workers with similar skills because of the risk she faces in her daily job.

Accepted Answer

Ben's higher salary is not a compensating differential because it is based on a characteristic (prestigious university degree) that does not directly impact his job requirements or working conditions. Compensating differentials are typically offered to offset less desirable aspects of a job or work environment, such as long hours, dangerous conditions, or inflexible schedules. Options A, B, and D all provide examples of compensating differentials.

Question 19

If a worker is indifferent between a job with a wage of $10 per hour and a job with a wage of $12 per hour, then the
A)higher-paying job has a compensating wage differential of $2 per hour.
B)higher-paying job has a compensating wage differential of $12 per hour.
C)higher-paying job is intrinsically more attractive than the lower-paying job.
D)wage in the higher-paying job must eventually fall due to competition.

Accepted Answer

If a worker is indifferent between two jobs with different wages, then the difference in wages is the compensating wage differential. In this case, the higher-paying job has a compensating wage differential of $2 per hour ($12 - $10 = $2).

Question 20

A company has two locations where it employs workers doing the same job and working the same hours. Other things the same most workers would prefer to live in location A, but location A has a higher cost of living than location B.
A)The company likely needs to pay workers in location A more.
B)The company likely needs to pay workers in location B more.
C)It's not clear if the company would need to pay more to workers in location A or location B.
D)The company must pay workers the same amount.

Accepted Answer

The answer of A company has two locations where it...

Quiz 19: Earnings and Discrimination

The statement that "night shift workers make a higher wage than day shift workers" is likely to reflect the fact that

On average, electricians who work on dangerous high-voltage power lines earn more per hour than similarly skilled electricians who don't work on dangerous high-voltage power lines. The difference in pay is attributed to

Sally and Harry both work at the local factory producing cars. Sally earns $22 per hour working the day shift, and Harry earns $25 per hour working the night shift. Sally and Harry do the same job, have the same experience, and have the same level of education. This means that the

The term "compensating differential" refers to

A compensating differential is

Construction work is much riskier than working as a server at a restaurant. As a result, we'd expect a difference in wages between the two jobs. The difference is known as

A difference in wages that reflects differences in the nonpay features of two jobs is called

Factory workers who work the day shift earn less per hour than similarly-skilled factory workers who work the night shift. The difference in pay is attributed to

Many kindergarten teachers have advanced education degrees, yet they have lower average earnings than other individuals with similar education levels. A potential explanation for the differences in earnings is that kindergarten teachers

Wages of doctors tend to be higher than wages of bankers. Which of the following is a compensating differential explaining the difference in wages?

Which term do economists use to refer to a difference in wages that arises from nonmonetary characteristics of different jobs?

Since people get sick at all hours of the day, some nurses who work in hospitals are required to work the night shift. In most cases, the nurses who work the night shift earn a higher hourly wage for the same work as the nurses who work the day shift. This difference in pay is referred to as a

Workers who work the night shift are often paid more than those who do identical work on the day shift. This is referred to as a

Which of the following is not an example of a compensating differential?

If a worker is indifferent between a job with a wage of $10 per hour and a job with a wage of $12 per hour, then the

A company has two locations where it employs workers doing the same job and working the same hours. Other things the same most workers would prefer to live in location A, but location A has a higher cost of living than location B.