Deck 7: Defining Competitiveness

Question 1

The market pay rate is the:

A) minimum wage rate set by the Department of Labor.
B) pay rate at which applicants will accept a job.
C) going rate.
D) point at which supply and demand lines cross.

Answer 1

D

Question 2

The assumption of the upward sloping supply curve may not hold when _____.

A) wages are low
B) wages are high
C) unemployment is low
D) unemployment is high

Answer 2

C

Question 3

Employers continue to hire until marginal revenue of the last hire equals their wage rate because as per the first labor market theory assumption:

A) markets are competitive.
B) pay rates reflect all costs of employment.
C) employers seek to maximize profits.
D) workers are homogeneous and interchangeable.

Answer 3

C

Question 4

_____ refers to the average of the array of rates paid by an employer.

A) Cost to the company
B) Remuneration
C) Compensation
D) Pay level

Question 5

Output associated with hiring an additional person,holding constant other production factors,is referred to as:

A) productivity.
B) the marginal product of labor.
C) incremental productivity.
D) the marginal revenue product of labor.

Question 6

Which of following is an example of the demand side of labor?

A) Level of pay applicants will accept
B) Qualifications of applicants
C) Pay level offered by an employer
D) Locations of potential employees

Question 7

All of the following except the _____ shape external competitiveness.

A) skill level of employees
B) nature of demand
C) industry strategy
D) level of product demand

Question 8

In a hiring situation,considering that other potential costs will not change in the short run,the level of demand that maximizes profits is that level at which the _____ of the last hire is equal to the _____ for that hire.

A) demand factor;supply factor
B) marginal output;market price
C) incremental output;marginal output
D) marginal revenue;wage rate

Question 9

If Company A and Company B pay the same total compensation for a job,which of the following is most likely true?

A) Base pay is same
B) Benefits costs are the same
C) The pay mix differs
D) The pay mix is the same

Question 10

A small lawn care company has two mowers and four employees.If it hires another employee,how productive will productivity of the fifth employee compare to the current two employees?

A) Less productive
B) More productive
C) The same
D) There is not enough information to determine productivity

Question 11

Considering the third assumption of labor market theory,although some firms find lowering the job requirements and hiring less-skilled workers a better choice than raising wages,this choice incurs:

A) lower marginal productivity.
B) increased training costs.
C) decreased marginal output.
D) higher recruitment costs.

Question 12

Pay level decisions have a significant impact on expenses.Other things being equal,the higher the pay level,the higher the:

A) margins.
B) labor costs.
C) return on investments.
D) fixed costs.

Question 13

_____ theory is typically associated with greater profits.

A) Signaling
B) Compensating wage differentials
C) Efficiency wage
D) Human capital

Question 14

Which theory supports the idea that coal mining should be paid more than office clerical work?

A) Signaling
B) Marginal productivity
C) Efficiency wage
D) Compensating differentials

Question 15

Which of the following is an example of a quoted-price?

A) A product on e-Bay
B) A product on Priceline
C) A used car
D) A product on Amazon

Question 16

_____ is an example of a bourse.

A) The stated starting wage of a job in an ad
B) The total compensation for a top athlete
C) The price of a product on Amazon
D) The price of a box of cereal at a grocery store

Question 17

The theory that has the most implications for staffing is the _____ theory.

A) compensating differentials
B) efficiency wage
C) signaling
D) marginal productivity

Question 18

Which of the following is not a reason a company might pay base wages above market competitors?

A) Employees are more productive
B) Turnover will be lower
C) Competitor production costs are lower
D) To attract more job applicants

Question 19

If Company A raises its pay rate one dollar per hour to hire additional workers and competitors immediately match the increase,what is the most likely result?

A) Higher labor costs for Company A,but not more workers
B) Company A will hire the needed workers at the higher wage rate
C) Competitors will lose employees to Company A
D) Company A will hire higher quality workers

Question 20

Research on efficiency wage theory shows that:

A) more unqualified workers apply
B) disciplinary layoffs are higher
C) more supervision is required
D) profits are not related

Question 21

_____ sets a maximum pay level an employer can pay.

A) Government legislation
B) The product market
C) The labor market
D) Labor market competitors

Question 22

Which of the following is not true of the relationship between employer size and its ability to pay?

A) Talented individuals have a higher marginal value in a larger organization.
B) Talented people can influence more people and decisions.
C) Influence of talented people leads to more profits.
D) Talented people prefer to work in larger organizations.

Question 23

The _____ theory is the most influential in explaining pay-level differences.

A) human capital
B) marginal productivity
C) efficiency wage
D) signaling

Question 24

Segmented labor supply involves all of the following except:

A) hiring from different sources
B) paying workers differently who are performing the same work
C) hiring from different sources and differential pay and benefits for the same work
D) employing regulars,part-timers,and temps

Question 25

The pay-mix component in which benefits is likely to be largest is _____.

A) work-life balance
B) security or commitment
C) performance driven
D) market watch

Question 26

A pay policy most likely to reduce pay dissatisfaction is _____.

A) lead
B) employer of choice
C) hybrid
D) match

Question 27

Implication of the _____ theory is that pay level affects an employer's ability to recruit.

A) human capital
B) reservation wage
C) signaling
D) efficiency

Question 28

In _____ theory,pay is described as noncompensatory.

A) efficiency wage
B) signaling
C) reservation wage
D) marginal productivity

Question 29

All of the following are important factors in defining a market for compensation purposes except:

A) skill/knowledge required.
B) product acceptance.
C) ability to pay.
D) product and/or labor market competitors.

Question 30

All of the following are advantages of a lead pay policy except _____.

A) reduced training time
B) reduced turnover
C) reduced absenteeism
D) higher financial performance

Question 31

Evidence shows that in manufacturing,_____ is positively correlated with hourly wage level.

A) retention
B) productivity
C) job satisfaction
D) total profit

Question 32

The most common pay policy is _____.

A) lead
B) lag
C) hybrid
D) match

Question 33

Rent sharing is most commonly associated with the _____ theory.

A) human capital
B) signaling
C) marginal productivity
D) efficiency wage

Question 34

The study referred to in the text on how managers make wage adjustment decisions found:

A) level of unemployment had a major effect
B) profitability affected the overall pay budget
C) managers believed efficiency wage theory
D) managers believed higher pay makes supervision easier

Question 35

Which of the following factors do not affect an employer's ability to pay high wages?

A) Product demand
B) Degree of competition
C) Productivity of labor
D) Supply of skilled employees

Question 36

Which of the following is not a consequence of level of competitiveness of total compensation?

A) Increase probability of union-free status
B) Increase organization profitability
C) Reduce voluntary turnover
D) Reduce pay-related work stoppages

Question 37

The pay policy associated with increased productivity is the _____ policy.

A) lead
B) match
C) hybrid
D) employer of choice

Question 38

Among pay-mix alternatives,base pay is largest in _____.

A) work-life balance
B) security or commitment
C) performance driven
D) market match

Question 39

Wages tend to be low in which of the following industries?

A) Education and health care
B) Technology intensive industries
C) Professional services
D) Pharmaceuticals

Question 40

In which of the following would data from labor market competitors be given more weight than product market competitors data?

A) Labor costs area a large share of total costs
B) Employee skills are specific to the product market
C) Product demand is responsive to price changes
D) The supply of labor is responsive to changes in pay

Question 41

According to efficiency-wage theory,paying higher wages than competitors lowers labor costs due to more efficient workers.

Question 42

Other things being constant,in a hiring scenario,the employer will continue to hire until the marginal revenue generated by the last hire is equal to the costs associated with employing that person.

Question 43

In a labor market,the market rate is where the lines for labor demand and labor supply cross.

Question 44

Compensating differentials theory says that paying above market wages will lead to workers with higher ability.

Question 45

Signaling theory applies to both the demand and supply side.

Question 46

An individual manager could be a factor affecting an employer's external competitiveness.

Question 47

Job applicants who will not accept a job that pays below a certain level are acting according to signaling theory.

Question 48

Marginal productivity theory argues that when factors of production are held constant,each additional worker is less productive than the last one hired.

Question 49

Both pay level and pay mix decisions focus on two objectives: (1)control costs and increase revenues and (2)attract and retain employees.

Question 50

Signaling theory argues that higher wages leads to greater efficiency.

Question 51

There is no single "going rate" in the labor market for a specific job.

Question 52

The first assumption of labor market theories is that employers always seek to maximize penetration.

Question 53

Graduating students usually find themselves in a quoted-labor market.

Question 54

Stores that label each item's price or ads that list a job opening's starting wage are examples of bourses.

Question 55

Marginal revenue is measurable and used by managers to determine both pay levels and how many employees to hire.

Question 56

In a labor market,the demand side focuses on the actions of the employers.

Question 57

An employer offering lower base pay with high bonuses is likely signaling they are seeking risk-taking employees.

Question 58

In practice,organizations use skills and competencies to assess value of labor instead of marginal revenue product.

Question 59

In determining the compensation strategy,a major strategic decision is whether to mirror what competitors are paying.

Question 60

External competitiveness is primarily determined by the impact of government regulations on the firm or industry.

Question 61

Human capital theory assumes that people are paid at the value of their marginal product.

Question 62

What is the principal argument of the compensating differentials theory?

Question 63

What explains the upward sloping supply under the human capital theory?

Question 64

Does an above-market wage guarantee a better workforce?

Question 65

The product market sets the floor on the minimum wage required to attract sufficient numbers of employees.

Question 66

The three factors usually used to determine the relevant labor markets are the occupation,geography,and competitors.

Question 67

Talented individuals have a higher marginal value in larger organizations.

Question 68

What are the factors that affect decisions on pay level and mix?

Question 69

According to efficiency-wage theory,how does increased wages increase efficiency and lower labor costs?

Question 70

Employers in highly competitive markets are less able to raise prices without loss of revenues.

Question 71

How do managers tackle the fact that neither marginal product nor marginal revenue is directly measurable?

Question 72

It is likely that workers act in accordance with reservation wage theory with respect to both wages and benefits.

Question 73

What are the basic assumptions of labor market theories?

Question 74

A lead policy may force the employer to increase wages of current employees too,to avoid internal misalignment and murmuring.

Question 75

Wages in labor-intensive industries are generally lower than in technology intensive industries.

Question 76

The most influential theory explaining pay-level differences is marginal revenue productivity.

Question 77

What is the significance of marginal revenue?

Question 78

Combat pay premiums paid to military personnel offset some of the risk of being fired upon is an example of a lead pay-level policy.

Question 79

Explain external competitiveness.

Question 80

What is the relevance of signaling in compensation systems?