Which of the Following Is an Example of a Compensating

question 249

Multiple Choice

Which of the following is an example of a compensating wage differential?

• A) Nurse anaesthetists are paid less than anaesthetists with medical degrees.
• B) Workers in a dynamite mine receive higher wages than if they worked in other jobs that require the same level of skills.
• C) In the market for lawyers, top graduates from the top programs earn starting salaries that are significantly higher than the starting salaries earned by lower-ranked graduates from the lower-ranked programs.
• D) Popular movie stars like George Clooney command much higher salaries than other talented but lesser-known actors.

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Definitions:

Residual Value

The approximated price an asset will bring in at the conclusion of its operational life when it is sold.

Straight-Line Basis

A method of calculating depreciation or amortization that spreads the asset's cost evenly across its useful life.

Accumulated Depreciation

The total amount of an asset's cost that has been expensed over time due to wear and tear, obsolescence, or age.

Residual Value

The projected sum an asset will fetch at the time of sale, once it has surpassed its lifespan.