Factory workers who work the day shift earn less per hour than similarly-skilled factory workers who work on the night shift.The difference in pay is attributed to
A) the marginal product of labor.
B) the marginal product of capital.
C) diminishing marginal returns.
D) a compensating differential.

Question

Quizplus · Accepted Answer

A compensating differential is a difference in pay that is offered to workers for working under more difficult or undesirable conditions, such as working at night. In this case, the night shift is likely less desirable for most workers, and therefore the higher pay is offered as a compensating differential to attract workers to that shift. The other choices are not as appropriate, as the marginal product of labor and capital and diminishing marginal returns would not likely result in a pay differential between day and night shifts.

Factory Workers Who Work the Day Shift Earn Less Per