Question 1

Cafeteria benefit plans suffer from two defects:

Accepted Answer

A)  cost of administration and employee decisions. 
B)  cost of administration and adverse selection. 
C)  employee decision-making and adverse selection. 
D)  employee decision-making and free riders. 
A)  cost of administration and employee decisions. 
B)  cost of administration and adverse selection. 
C)  employee decision-making and adverse selection. 
D)  employee decision-making and free riders.

Question 2

When a firm focuses on hiring only for entry-level jobs and it tends to promote from within the firm, then the firm is said to:

Accepted Answer

A)  use the benchmark competitive labor market. 
B)  have an internal labor market. 
C)  hire based on human capital. 
D)  use compensating differentials. 
A)  use the benchmark competitive labor market. 
B)  have an internal labor market. 
C)  hire based on human capital. 
D)  use compensating differentials.

Question 3

The gains from general training goes to:

Accepted Answer

A)  neither to the firms, nor to the employees, but to the training institute. 
B)  both firms and employees. 
C)  firms, not employees. 
D)  employees, not firms. 
A)  neither to the firms, nor to the employees, but to the training institute. 
B)  both firms and employees. 
C)  firms, not employees. 
D)  employees, not firms.

Question 4

The typical salary/benefit mix for full-time workers in US business is:

Accepted Answer

A)  90% salary, 10% benefits. 
B)  75% salary, 25% benefits. 
C)  55% salary, 45% benefits. 
D)  100% salary, benefits are illegal. 
A)  90% salary, 10% benefits. 
B)  75% salary, 25% benefits. 
C)  55% salary, 45% benefits. 
D)  100% salary, benefits are illegal.

Question 5

Always Round Tire tries to base its promotions on seniority (where education and training requirements are not necessary). The company finds that this system seems to work most of the time with shop floor supervisors and team managers. But the system breaks down for higher-level positions. Why?

Accepted Answer

Promotion opportunities are few for high

Question 6

In the basic competitive model of labor markets we see that:

Accepted Answer

A)  individual firms and workers can exert a lot of influence over the wage rate. 
B)  individual workers have a lot of control over the wages received. 
C)  individual firms have a lot of control over the wages paid. 
D)  individual firms and workers have no control over the wage rate paid and received. 
A)  individual firms and workers can exert a lot of influence over the wage rate. 
B)  individual workers have a lot of control over the wages received. 
C)  individual firms have a lot of control over the wages paid. 
D)  individual firms and workers have no control over the wage rate paid and received.

Question 7

In the benchmark competitive case, the firm will expand the hiring of employees until the marginal revenue product is:

Accepted Answer

A)  less than the market wage rate. 
B)  equal to the market wage rate. 
C)  greater than the market wage rate. 
D)  the universe of the market wage rate. 
A)  less than the market wage rate. 
B)  equal to the market wage rate. 
C)  greater than the market wage rate. 
D)  the universe of the market wage rate.

Question 8

To help with motivation, long-term productivity, and retention, firms with internal labor markets tend to offer all of the following except which of the following?

Accepted Answer

A)  Efficiency wages. 
B)  Benchmark competitive wages. 
C)  Pay based on job seniority. 
D)  Internally based promotion systems. 
A)  Efficiency wages. 
B)  Benchmark competitive wages. 
C)  Pay based on job seniority. 
D)  Internally based promotion systems.

Question 9

The salary gains from general training in human capital tend to go to the:

Accepted Answer

A)  employing firm, not the individual. 
B)  federal government in higher taxes. 
C)  individual, not the employing firm. 
D)  parents, since they paid the education in the first place. 
A)  employing firm, not the individual. 
B)  federal government in higher taxes. 
C)  individual, not the employing firm. 
D)  parents, since they paid the education in the first place.

Question 10

In Mexico, many garment or sewing shops found they could entice many young people to work for them if they offered clean, air conditioned work areas with high-quality locker rooms to clean up in after the work day. Typically, traditional garment shops had to offer ____________ to get workers to apply for the hard, repetitive, and somewhat dangerous work.

Accepted Answer

A)  benchmark competitive wages 
B)  compensating differentials 
C)  monopoly wages 
D)  wages based on human capital development of each employee 
A)  benchmark competitive wages 
B)  compensating differentials 
C)  monopoly wages 
D)  wages based on human capital development of each employee

Question 11

In an internal labor market, employees often spend too much time lobbying for promotions or for preferred job assignments. This is called:

Accepted Answer

A)  an administrative cost. 
B)  market costs. 
C)  influence costs. 
D)  human capital costs. 
A)  an administrative cost. 
B)  market costs. 
C)  influence costs. 
D)  human capital costs.

Question 12

Human capital is a term that characterizes:

Accepted Answer

A)  the number of workers in a company who are productive. 
B)  firms that sell their products to customers directly. 
C)  individuals who buy skills from the companies the work for. 
D)  individuals with a set of skills that they rent to employers. 
A)  the number of workers in a company who are productive. 
B)  firms that sell their products to customers directly. 
C)  individuals who buy skills from the companies the work for. 
D)  individuals with a set of skills that they rent to employers.

Question 13

Fred Powell of TruLite makes a verbal pledge to every new employee that he will not lay off employees after they have worked for TruLite for two years and that TruLite will make all promotions internally. Why would Powell make such a pledge? Why is the pledge oral?

Accepted Answer

TruLite likely wants to invest in firm-s

Question 14

When rates of pay and job assignments are determined by administrative rules and implicit promises of management, then the firm is operating in:

Accepted Answer

A)  an internal labor market. 
B)  a competitive labor market. 
C)  a human capital market. 
D)  a risk sharing market. 
A)  an internal labor market. 
B)  a competitive labor market. 
C)  a human capital market. 
D)  a risk sharing market.

Question 15

Draw a graph showing the trade-off between salary and benefits. Show the employee's indifference and the firm's isocost curve. Label the equilibrium salary/benefits combination. Discuss what would happen as individual taxes fall or as firm payroll taxes rise.

Accepted Answer

The indifference curve "U" shows all sal

Question 16

We know that a firm is paying way below the market if:

Accepted Answer

A)  the number of applications for a job posting is high and the quit rate is low. 
B)  the number of applications for a job posting and the quit rate are high. 
C)  the number of applications for a job posting and the quit rate are low. 
D)  the number of applications for a job posting is low and the quit rate is high. 
A)  the number of applications for a job posting is high and the quit rate is low. 
B)  the number of applications for a job posting and the quit rate are high. 
C)  the number of applications for a job posting and the quit rate are low. 
D)  the number of applications for a job posting is low and the quit rate is high.

Question 17

The gains from specific training goes to:

Accepted Answer

A)  neither to the firms, nor to the employees, but to the training institute. 
B)  both firms and employees. 
C)  firms, not employees. 
D)  employees, not firms. 
A)  neither to the firms, nor to the employees, but to the training institute. 
B)  both firms and employees. 
C)  firms, not employees. 
D)  employees, not firms.

Question 18

When a firm makes verbal promises about future working conditions, benefits and raises, and promotions, it is offering:

Accepted Answer

A)  an implicit labor contract. 
B)  an explicit labor contract. 
C)  a human capital contract. 
D)  compensating differential. 
A)  an implicit labor contract. 
B)  an explicit labor contract. 
C)  a human capital contract. 
D)  compensating differential.

Question 19

What are efficiency wages and why are they important in internal labor markets?

Accepted Answer

Companies want employees to work hard, b

Question 20

In the basic competitive model of labor markets we assume that:

Accepted Answer

A)  individuals are not identical in training and skills, and jobs are not identical. 
B)  not all individuals are identical in training and skills, but all jobs are identical. 
C)  individuals are identical in training and skills, but not all jobs are identical. 
D)  individuals are identical in training and skills, and all jobs are identical. 
A)  individuals are not identical in training and skills, and jobs are not identical. 
B)  not all individuals are identical in training and skills, but all jobs are identical. 
C)  individuals are identical in training and skills, but not all jobs are identical. 
D)  individuals are identical in training and skills, and all jobs are identical.

Exam 14: Attracting and Retaining Qualified Employees

Cafeteria benefit plans suffer from two defects:

When a firm focuses on hiring only for entry-level jobs and it tends to promote from within the firm, then the firm is said to:

The gains from general training goes to:

The typical salary/benefit mix for full-time workers in US business is:

Always Round Tire tries to base its promotions on seniority (where education and training requirements are not necessary). The company finds that this system seems to work most of the time with shop floor supervisors and team managers. But the system breaks down for higher-level positions. Why?

In the basic competitive model of labor markets we see that:

In the benchmark competitive case, the firm will expand the hiring of employees until the marginal revenue product is:

To help with motivation, long-term productivity, and retention, firms with internal labor markets tend to offer all of the following except which of the following?

The salary gains from general training in human capital tend to go to the:

In an internal labor market, employees often spend too much time lobbying for promotions or for preferred job assignments. This is called:

Human capital is a term that characterizes:

Fred Powell of TruLite makes a verbal pledge to every new employee that he will not lay off employees after they have worked for TruLite for two years and that TruLite will make all promotions internally. Why would Powell make such a pledge? Why is the pledge oral?

When rates of pay and job assignments are determined by administrative rules and implicit promises of management, then the firm is operating in:

Draw a graph showing the trade-off between salary and benefits. Show the employee's indifference and the firm's isocost curve. Label the equilibrium salary/benefits combination. Discuss what would happen as individual taxes fall or as firm payroll taxes rise.

We know that a firm is paying way below the market if:

The gains from specific training goes to:

When a firm makes verbal promises about future working conditions, benefits and raises, and promotions, it is offering:

What are efficiency wages and why are they important in internal labor markets?

In the basic competitive model of labor markets we assume that:

Introduction

Economists View of Behavior

Markets, Organizations, and the Role of Knowledge

Demand

Production and Cost

Market Structure

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: The Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: The Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters