Question 1

Pay for performance works LEAST well for an employee

Accepted Answer

A)  who works as a counselor for other employees in a company. 
B)  who is closely supervised. 
C)  who maximizes utility. 
D)  whose value added is easily measured. 
A)  who works as a counselor for other employees in a company. 
B)  who is closely supervised. 
C)  who maximizes utility. 
D)  whose value added is easily measured.

Question 2

The workers who will prefer piece-rate pay will usually be

Accepted Answer

A)  less present-oriented than average. 
B)  less motivated than average. 
C)  more productive than average. 
D)  more risk-averse than average. 
A)  less present-oriented than average. 
B)  less motivated than average. 
C)  more productive than average. 
D)  more risk-averse than average.

Question 3

Which of the following would NOT be a "signal" to an employer that a potential employee has a low discount rate?

Accepted Answer

A)  The employee's possession of a college or graduate degree. 
B)  The employee's willingness to accept a low-paying job with a good pension plan. 
C)  The employee's desire for a relatively high salary and little chance of advancement. 
D)  The employee's willingness to attain large amounts of training. 
A)  The employee's possession of a college or graduate degree. 
B)  The employee's willingness to accept a low-paying job with a good pension plan. 
C)  The employee's desire for a relatively high salary and little chance of advancement. 
D)  The employee's willingness to attain large amounts of training.

Question 4

Golf tournaments are promotion tournaments where the person coming in first gets substantially more than the person coming in second.Which of the following would likely decrease the difference in prize money going to the person coming in first (assuming the tournament sponsors want each player to give their best effort to playing good golf)?

Accepted Answer

A)  Variation in playing conditions increase. 
B)  Players come to dislike the variation in pay more. 
C)  Players playing hard increase the money the tournament can make. 
D)  Golf rules are modified to allow players to hit each other with golf clubs. 
A)  Variation in playing conditions increase. 
B)  Players come to dislike the variation in pay more. 
C)  Players playing hard increase the money the tournament can make. 
D)  Golf rules are modified to allow players to hit each other with golf clubs.

Question 5

How does the payment of an efficiency wage affect worker productivity?

Accepted Answer

A firm pays an efficiency wage when it p

Question 6

What is meant by the term opportunistic behavior in the context of an implicit contract? How can an implicit contract be structured to limit opportunistic behavior?

Accepted Answer

Opportunistic behavior occurs when worke

Question 7

Identify and discuss the two general problems that output-based pay schemes suffer from.

Accepted Answer

Basing pay on output produced is a means

Question 8

Underpayment followed by overpayment is most likely to

Accepted Answer

A)  decrease work incentives due to low wages in the first period. 
B)  require greater supervision. 
C)  attract present-oriented workers. 
D)  increase productivity of workers seeking to qualify for later overpayment. 
A)  decrease work incentives due to low wages in the first period. 
B)  require greater supervision. 
C)  attract present-oriented workers. 
D)  increase productivity of workers seeking to qualify for later overpayment.

Question 9

Which of the following makes a promotion tournament (where the winner gets a large prize,such as a promotion)an effective method for motivating workers?

Accepted Answer

A)  Contestants must cooperate with each other to make the firm productive. 
B)  The person who wins gets a prize equal to how much better they are than others. 
C)  It is uncertain as to who will win. 
D)  There are many persons competing for the prize. 
A)  Contestants must cooperate with each other to make the firm productive. 
B)  The person who wins gets a prize equal to how much better they are than others. 
C)  It is uncertain as to who will win. 
D)  There are many persons competing for the prize.

Question 10

How does a firm that employs an underpayment-now,over-payment later compensation scheme sequence the pay of its workers? Illustrate your explanation with the appropriate graph.

Accepted Answer

In such a compensation scheme the firm p

Question 11

The surplus due to specific training of employees is

Accepted Answer

A)  received by the employees. 
B)  received by the employers. 
C)  used to increase employees' wages above their marginal product. 
D)  shared by the employees and the employers. 
A)  received by the employees. 
B)  received by the employers. 
C)  used to increase employees' wages above their marginal product. 
D)  shared by the employees and the employers.

Question 12

One problem with pay for performance is that

Accepted Answer

A)  it provides incentives for workers to put forth effort. 
B)  workers are risk-averse. 
C)  supervision is very expensive. 
D)  workers are income maximizers. 
A)  it provides incentives for workers to put forth effort. 
B)  workers are risk-averse. 
C)  supervision is very expensive. 
D)  workers are income maximizers.

Question 13

Efficiency wages are

Accepted Answer

A)  designed to increase profits through reduced turnover and increased morale. 
B)  thought to decrease unemployment. 
C)  not profit-maximizing for employers because they are paying more than the market wage. 
D)  the lowest wages at which a firm can hire workers. 
A)  designed to increase profits through reduced turnover and increased morale. 
B)  thought to decrease unemployment. 
C)  not profit-maximizing for employers because they are paying more than the market wage. 
D)  the lowest wages at which a firm can hire workers.

Question 14

Which of the following would NOT (even if true)explain why wages rise with job tenure?

Accepted Answer

A)  Workers become more productive the longer they are with the firm. 
B)  Over time, the firm is able to dismiss less productive workers. 
C)  Workers acquire more specific human capital the longer they are with the firm. 
D)  Starting with a lower wage and then letting wages rise with job tenure reduces the present value of wages paid to a worker by an employer. 
A)  Workers become more productive the longer they are with the firm. 
B)  Over time, the firm is able to dismiss less productive workers. 
C)  Workers acquire more specific human capital the longer they are with the firm. 
D)  Starting with a lower wage and then letting wages rise with job tenure reduces the present value of wages paid to a worker by an employer.

Question 15

What is the firm-size effect? What accounts for the firm-size effect?

Accepted Answer

The firm-size effect is the empirical ob

Question 16

A promotion tournament is

Accepted Answer

A)  a process to assure the most productive worker is paid his or her marginal product. 
B)  a process to help a corporation get rid of "deadwood." 
C)  a way to insure that all diligent workers get big rewards. 
D)  a process to motivate several workers to try and win one high-paying job. 
A)  a process to assure the most productive worker is paid his or her marginal product. 
B)  a process to help a corporation get rid of "deadwood." 
C)  a way to insure that all diligent workers get big rewards. 
D)  a process to motivate several workers to try and win one high-paying job.

Question 17

A self-enforcing contract requires that

Accepted Answer

A)  employees gain from opportunistic behavior. 
B)  one party receives the entire surplus. 
C)  both employees and employers lose by discontinuing their contract. 
D)  the surplus be divided equally. 
A)  employees gain from opportunistic behavior. 
B)  one party receives the entire surplus. 
C)  both employees and employers lose by discontinuing their contract. 
D)  the surplus be divided equally.

Question 18

Opportunistic behavior is a tendency on the part of employees to

Accepted Answer

A)  end up working less diligently than their stated intentions implied. 
B)  take the initiative to help advance the employer's objectives. 
C)  plan to mislead employers to attain a "cushy" job. 
D)  maximize income. 
A)  end up working less diligently than their stated intentions implied. 
B)  take the initiative to help advance the employer's objectives. 
C)  plan to mislead employers to attain a "cushy" job. 
D)  maximize income.

Question 19

The use of tournament method of pay (paying winners much more than others)is commonly used in golf tournaments.Which of the following would NOT explain this result?

Accepted Answer

A)  Trying harder to win has little effect on the chance of winning. 
B)  It is prohibited for one golfer to change the lie of another golfer's golf ball. 
C)  Fans are willing to pay more to see pros play at their best. 
D)  Playing conditions are usually similar for most players. 
A)  Trying harder to win has little effect on the chance of winning. 
B)  It is prohibited for one golfer to change the lie of another golfer's golf ball. 
C)  Fans are willing to pay more to see pros play at their best. 
D)  Playing conditions are usually similar for most players.

Question 20

Many employees prefer to be paid on the basis of

Accepted Answer

A)  output, because it decreases variation of wages. 
B)  time, because it decreases variation of wages. 
C)  output, because it increases variation of wages. 
D)  time, because it increases variation of wages. 
A)  output, because it decreases variation of wages. 
B)  time, because it decreases variation of wages. 
C)  output, because it increases variation of wages. 
D)  time, because it increases variation of wages.

Pay for performance works LEAST well for an employee

The workers who will prefer piece-rate pay will usually be

Which of the following would NOT be a "signal" to an employer that a potential employee has a low discount rate?

How does the payment of an efficiency wage affect worker productivity?

What is meant by the term opportunistic behavior in the context of an implicit contract? How can an implicit contract be structured to limit opportunistic behavior?

Identify and discuss the two general problems that output-based pay schemes suffer from.

Underpayment followed by overpayment is most likely to

Which of the following makes a promotion tournament (where the winner gets a large prize,such as a promotion)an effective method for motivating workers?

How does a firm that employs an underpayment-now,over-payment later compensation scheme sequence the pay of its workers? Illustrate your explanation with the appropriate graph.

The surplus due to specific training of employees is

One problem with pay for performance is that

Efficiency wages are

Which of the following would NOT (even if true)explain why wages rise with job tenure?

What is the firm-size effect? What accounts for the firm-size effect?

A promotion tournament is

A self-enforcing contract requires that

Opportunistic behavior is a tendency on the part of employees to

The use of tournament method of pay (paying winners much more than others)is commonly used in golf tournaments.Which of the following would NOT explain this result?

Many employees prefer to be paid on the basis of

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: The Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Compensating Wage Differentials and Labor Markets

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Gender,Race,and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

Inequality in Earnings

The Labor-Market Effects of International Trade and Production Sharing

Filters

Exam 11: Pay and Productivity: Wage Determination within the Firm

Pay for performance works LEAST well for an employee

The workers who will prefer piece-rate pay will usually be

Which of the following would NOT be a "signal" to an employer that a potential employee has a low discount rate?

How does the payment of an efficiency wage affect worker productivity?

What is meant by the term opportunistic behavior in the context of an implicit contract? How can an implicit contract be structured to limit opportunistic behavior?

Identify and discuss the two general problems that output-based pay schemes suffer from.

Underpayment followed by overpayment is most likely to

Which of the following makes a promotion tournament (where the winner gets a large prize,such as a promotion)an effective method for motivating workers?

How does a firm that employs an underpayment-now,over-payment later compensation scheme sequence the pay of its workers? Illustrate your explanation with the appropriate graph.

The surplus due to specific training of employees is

One problem with pay for performance is that

Efficiency wages are

Which of the following would NOT (even if true)explain why wages rise with job tenure?

What is the firm-size effect? What accounts for the firm-size effect?

A promotion tournament is

A self-enforcing contract requires that

Opportunistic behavior is a tendency on the part of employees to

The use of tournament method of pay (paying winners much more than others)is commonly used in golf tournaments.Which of the following would NOT explain this result?

Many employees prefer to be paid on the basis of

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: The Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Compensating Wage Differentials and Labor Markets

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Gender,Race,and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

Inequality in Earnings

The Labor-Market Effects of International Trade and Production Sharing

Filters