Chapter 73, Problem 3MCQ

To determine

The correct option for compensating differentials.

Answer to Problem 3MCQ

From the available options, the correct option is danger.

Explanation of Solution

Compensating differentials leads to higher wages for any loss or unpleasant condition in which workers have to perform their job such as danger. Discrimination is the unjust treatment of any worker based on caste, religion, age, etc. marginal productivity means paying workers based on their contribution and a surplus of labor involves the excessed performance of labor than the actual requirement. higher wages to employees according to the risky nature of work. And, market power refers to the payment of wages according to the minimum required wage.

Therefore, the correct option is a (danger) and other all options are incorrect as they do not attach to any unpleasant condition of work.

Economics Concept Introduction

Introduction: According to the marginal productivity theory of income distribution, every individual will receive wage or income according to the total contribution or output that they produce.

Compensating differentials involves higher wages to employees according to the risky nature of work.