Which statement describes a compensating differential?
A)Tom Brady is paid more than a college professor.
B)A window washer in the suburbs is paid less than a window washer who washes the windows of skyscrapers.
C)A college professor is paid more than a janitor working in the same building.
D)On average, men are paid more than women.

Question

Quizplus · Accepted Answer

A compensating differential refers to the difference in wages paid to individuals for jobs that require different levels of inconvenience, risk, or non-monetary benefits. In this case, the window washer who washes the windows of skyscrapers is likely facing more risk and inconvenience compared to the one who washes windows in the suburbs, hence the difference in wages.

Which Statement Describes a Compensating Differential