Sam and Bob Have the Same Educational Background

question 180

Multiple Choice

Sam and Bob have the same educational background. Both have been policemen in Memphis for 10 years. Sam works from 11 P.M. until 7 A.M., and Bob works from 7 A.M. until 3 P.M. Sam's salary is $800 per month higher than Bob's salary. This is an example of a wage disparity due to:

• A) efficiency wages.
• B) market power.
• C) compensating differentials.
• D) discrimination.

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Definitions:

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of product.

Profit-maximizing Output

The level of production at which a company achieves the highest possible profit.

Marginal Cost

The rise in overall expenses resulting from the production of an additional unit.

Marginal Revenue

The additional income from selling one more unit of a good; it is the change in total revenue from an additional unit sold.