In the standard theory of compensating differentials, a worker's reservation price is
A)the amount of money it takes to entice the worker into accepting a risky job.
B)the amount of money it costs a worker to take a risky job.
C)the amount of money a worker loses for not taking any job.
D)the amount of money it costs a worker to take a safe job.
E)the difference between the wage paid in firms offering risky jobs and the wage paid by firms offering safe jobs.

Question

Quizplus · Accepted Answer

A worker's reservation price is the amount of additional income required to compensate them for the risks associated with a particular job. It is the minimum amount of compensation required to entice them to accept a risky job and is therefore the correct option.

In the Standard Theory of Compensating Differentials, a Worker's Reservation