Arthur and Robert have the same educational background. Both have been firemen in Atlanta for 10 years. Arthur works from 11 P.M. until 7 A.M., and Robert works from 7 A.M. until 3 P.M. Arthur's salary is $800 per month higher than Robert's salary. The wage disparity in this case is due to:
A) efficiency wages.
B) market power.
C) compensating differentials.
D) discrimination.

Question

Quizplus · Accepted Answer

The wage disparity in this case is due to compensating differentials as the two workers have the same educational background and work in the same industry but have different working hours. Arthur works during the night shift, which may be less desirable due to its impact on sleep and daily routines, resulting in a higher salary to compensate for the inconvenience. This difference in pay is not due to efficiency wages or discrimination since both workers have the same educational background and experience. It is also not due to market power as there is no evidence of either worker having an advantage in negotiating their wages with their employer.

Arthur and Robert Have the Same Educational Background