Compensating wage differentials arise because:
a. workers possess different skills.
b. workers prefer the characteristics of some to those of others.
c. firms pay higher wages for workers with higher marginal productivities.
d. firms discriminate in hiring.
Question 2
An example of moral hazard is
a. A taxi driver paid per mile taking the shortest route
b. a piece-rate garment worker shirking more than a per jour worker
c. an hourly salesman working harder than a commission salesman
d. an author on contract going to fewer book signings as one with a percentage royalty rate
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