An Example of a Compensating Differential Is

question 162

Multiple Choice

An example of a compensating differential is

• A) a cardiologist must train for two more years than a family practitioner and on average cardiologists earn 65% more per year than family practitioners.
• B) a police department hires both men and women who have just graduated from college. The men are assigned patrol duty, and the women are assigned desk jobs.
• C) it takes the same amount and type of training to be either a paramedic or an emergency room nurse. Paramedics earn about 25% more than emergency room nurses with the same amount of experience. About 12% of paramedics, but only 3% of emergency room nurses, are injured on the job each year.
• D) Paulie was injured on the job at a tanning salon and as a result of his injuries he can no longer work. He now qualifies for $1,600 a month in disability payments.

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Definitions:

Straight-Line

A technique for computing an asset's depreciation by distributing its cost evenly across each year of its expected useful life.

Double-Declining-Balance Method

An accelerated depreciation method that doubles the book value of an asset to calculate annual depreciation expense.

Residual Value

The approximated value of an asset at the conclusion of its period of utility.

Depreciation

Systematically dividing the cost of a tangible asset across the years it is expected to last.