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 has a compensating wage differential of $3 per hour.
B) higher-paying job has 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 compensating wage differential is the difference in wages that makes a worker indifferent between two jobs, accounting for non-wage job characteristics. Here, it's $3 per hour.

If a Worker Is Indifferent Between a Job with a Wage