Why do skilled workers generally earn more than unskilled workers?
A) The demand for unskilled labor is more inelastic than the demand for skilled labor.
B) Skilled labor has higher marginal revenue products than unskilled labor.
C) The demand for unskilled labor is greater than the demand for skilled labor.
D) The supply of skilled labor is greater than the supply of unskilled labor.

Question

Quizplus · Accepted Answer

Skilled labor generally has a higher marginal revenue product than unskilled labor, which means that each unit of skilled labor contributes more to the production process and generates higher revenue for the firm. Therefore, firms are willing to pay more for skilled workers to retain their services.

Why Do Skilled Workers Generally Earn More Than Unskilled Workers