The idea of compensating differences is used:

A) by inclusive unions as an argument in bargaining for wage rate increases.
B) to justify the application of minimum wages to low-wage labor markets.
C) to explain the divergence between wage rates and marginal resource cost.
D) to explain wage rate differences based on differing nonmonetary aspects of jobs.

Compensating differences theory suggests that different jobs have non-monetary characteristics that affect the desirability of the job, and individuals will be compensated based on these differences. These non-monetary characteristics could include working conditions, job security, location, or other factors that impact the attractiveness of the job. This theory helps to explain why workers in similar jobs may earn different wages, and can be used to justify why some jobs may command higher pay despite not requiring higher levels of skill or education.