Differences in Marginal Revenue Products Are the Most Important Factor

question 197

Multiple Choice

Differences in marginal revenue products are the most important factor in explaining wage differences.Other factors that explain wage differences include all but one of the following.Which factor does not help explain differences in wages?

• A)Cognitive differentials
• B)Compensating differentials
• C)Discrimination
• D)Labour unions

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Definitions:

Externalities

Economic side effects or consequences of commercial activities that affect other parties without being reflected in the cost of the goods or services involved.

Market Failure

A less than efficient allocation of resources.

Public Goods

Public goods refer to commodities or services that are made available to all members of a society, typically funded by the government, and characterized by non-excludability and non-rivalry in consumption.

Externalities

Consequences of an economic activity experienced by unrelated third parties; can be positive or negative.