Which of the following is likely to generate a compensating differential? a. One employee is more attractive than another. b. One employee works harder than another. c. One employee is willing to work the night shift while another is not. d. One employee is more educated than another. e. All of the answer choices generate compensating differentials.

1. **Understanding a Compensating Differential** A compensating differential is the extra pay added to a job's wage to compensate workers for undesirable aspects of the job (such as unpleasant hours, dangerous conditions, or other non-monetary costs). 2. **Analyzing Each Option** - **Option (a):** "One employee is more attractive than another." Being more attractive might affect opportunities in certain industries, but it is not a typical form of compensating differential since it does not compensate for a job's undesirable attributes. - **Option (b):** "One employee works harder than another." Differences in effort may affect performance-based pay or bonuses but are not a result of compensating differentials, which focus on non-wage attributes of jobs. - **Option (c):** "One employee is willing to work the night shift while another is not." Working the night shift is generally considered less desirable due to disruptions in sleep, family time, and potential safety issues. Therefore, employers often offer higher wages to compensate for these drawbacks. This is a classic example of a compensating differential. - **Option (d):** "One employee is more educated than another." Although higher education can lead to higher pay, the wage premium reflects increased skills and productivity rather than compensation for less desirable job characteristics. 3. **Conclusion** Since compensating differentials arise to offset undesirable job attributes, **Option (c)** is the most accurate example as it directly involves a trade-off for a less desirable job condition (working the night shift). Thus, the answer is: \( \textbf{c. One employee is willing to work the night shift while another is not.} \)