Suppose that a labor economist finds that one of her research subjects has earned significantly higher wages throughout his lifetime than would be predicted by standard measured variables. The economist also noted that each of the subject's position was found through connections at his family's exclusive country club.

Which one of the following likely explains this person's unusually high earnings?

a. Effort

b. Efficiency wages

c. Chance

d. Compensating differentials

Suppose that Juanita receives higher pay at her workplace than her colleagues do, when though they perform essentially the same type of work. If Juanita's productivity is about 25% higher than of each of her colleagues, which of the following wage concepts can explain this wage disparity? Check all that apply.

a. Efficiency wages

b. Chance

c. Compensating differentials

d. Effort

e. Natural ability

The reason why the economist's subjects was able to make that enormous earnings was because of his or her efforts. The subjects had really put more efforts in creating connections or knowing people, and through this, the connections paid off when he/ she needed them and this resulted to life earnings.

On the second aspect, Juanita received salary more than others because her output at work was more than her colleagues. Therefore her extra effort at work resulted in efficiency wages.