A Compensating Differential Is Mainly a Cause of a Difference

question 8

Multiple Choice

A compensating differential is mainly a cause of a difference in wages because:

• A) of differences in working conditions.
• B) of differences in human capital.
• C) of differences in productivity.
• D) all workers should be paid the same wage rate.

---

Definitions:

Option Strike Price

The strike price is the set price at which an option contract can be bought or sold when it is exercised.

Option Contract

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price within a specific period.

European Option

A type of option contract that can only be exercised at the expiration date, not before.

American Option

A type of options contract that allows holders to exercise their right to buy or sell the underlying asset at any time before the expiration date.