Equilibrium price differentials for productive resources
A) tend to be self-eliminating.
B) may be caused by differences in the quality of those resources.
C) are eliminated when the allocation of resources is in a state of equilibrium.
D) are unrelated to differences in nonmonetary benefits.

Question

Quizplus · Accepted Answer

Equilibrium price differentials for productive resources may be caused by differences in the quality of those resources. For example, if one factory has newer and more efficient machinery than another factory, the resource of that machinery will command a higher price in the labor market. These differences in quality and productivity can lead to differences in the equilibrium wage rate for workers with different skills or experience.

Equilibrium Price Differentials for Productive Resources