Which of the following comparisons best illustrates a compensating differential?
a. John's wage is higher than Jane's because the value of John's marginal product is higher than Jane's.
b. Karl's wage is higher than Kay's because Karl is very personable, and Kay is very gruff.
c. Beth's wage is higher than Bill's because Beth's job may cause long-term health problems, and Bill's job will not impair his health.
d. All of the above are good illustrations of compensating differentials.
c
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The law of demand asserts that all else equal, if the price of a good ________, the quantity demanded of that good ________
A) stays the same; decreases B) falls; decreases C) rises; stays the same D) falls; increases E) None of the above is correct.
Refer to the scenario above. The average total cost of Firm A when it produces 100 pens is $3, and the average total cost of Firm B when it produces 50 pens is $7. At these levels of production, which of the following statements is true?
A) Both firms incur losses. B) Firm A incurs a loss but Firm B makes a profit. C) Firm B incurs a loss but Firm A makes a profit. D) Both firms make profits.