In Order for the Compensating Differential Associated with a Risky

question 25

Multiple Choice

In order for the compensating differential associated with a risky job to be negative (so that a risky job pays less than a nonrisky job) , it must be that

• A) many workers are willing to work the risky job for free.
• B) most workers prefer the risky job to the safe job when both wages are equal.
• C) the number of risky jobs is less than the number of workers who prefer the risky job.
• D) there is great demand for labor in both sectors.
• E) the government mandates that the wages in the two sectors be equal.

---

Definitions:

Dividends Account

An account used to record the payment of dividends, which are distributions of a corporation's earnings to its shareholders.

Expense

Costs incurred in the process of earning revenue, typically including cost of goods sold, selling, general, and administrative expenses.

Cash Account

An account that records all transactions involving cash receipts and cash payments, including operating, investing, and financing activities.

T Account

A graphical representation used in double-entry bookkeeping to show the increases and decreases in an account, characterized by a T shape.