Mike and Alice work in different industries that have identical demand for workers. Mike receives a wage of $18 per hour, and Alice receives a wage of $12 per hour. Based on this, we can conclude that the industry in which Mike works has a relatively ______ supply of workers and that the compensating wage differential for Mike is:
A) lower; $18.
B) higher; $18.
C) lower: $6.
D) higher; $6.

Question

Quizplus · Accepted Answer

The industry in which Mike works has a relatively lower supply of workers, which typically results in higher wages due to the scarcity of labor. The compensating wage differential, the difference in wage that accounts for non-monetary differences in jobs, is $6 ($18 - $12).

Mike and Alice Work in Different Industries That Have Identical