Larry and Mike are equally skilled construction workers employed by the Brown and Root Company.Larry's job is riskier because he typically works on a scaffold 1,000 feet above ground.Larry's higher wage rate is the result of
A)economic discrimination.
B)a compensating differential.
C)a negative feedback loop.
D)a higher marginal revenue product.

Question

Quizplus · Accepted Answer

Larry is receiving a compensating differential, which is a higher wage rate to compensate for the higher risk associated with his job. This is a common practice in the labor market where workers who perform riskier jobs are compensated with higher wages.

Larry and Mike Are Equally Skilled Construction Workers Employed by the Brown