Free Market Wages Driven by Supply and Demand

Steps:

• Define free market: Wages set by labor supply and demand without external interference.
• Identify supply factors: Number of workers (C) and training required (D) affect labor availability and skills.
• Identify demand factors: Workplace dangers (A) influence employer willingness to pay higher wages for risk.
• Spot non-market factor: Government regulations (B) impose controls outside supply-demand dynamics.

Why B is correct:

• In a free market, wages equilibrate via supply and demand (per classical economics); government regulations distort this by enforcing minimums or standards unrelated to market forces.

Why the others are wrong:

• A: Higher danger raises demand for hazard pay, increasing wages via compensating differentials.
• C: More willing workers increase supply, lowering wages per supply-demand curve.
• D: More training boosts worker productivity, raising demand and thus wages.

Final answer: B