Question 1

Michael gets his first job after graduation with a weekly pay of $80.This implies that his productivity is less than $80.

Accepted Answer

A) True 
 B)False

Question 2

What are typical components of executive compensation and how do they resolve principal/agent problems between shareholders and executives?

Accepted Answer

Executive compensation often takes the f

Question 3

In competitive markets, the elasticity of labor supply is:

Accepted Answer

A) unrelated to time. 
B) inversely proportional to time elapsed since a wage change. 
C) unity. 
D) directly proportional to time elapsed since a wage change. 
A) unrelated to time. 
B) inversely proportional to time elapsed since a wage change. 
C) unity. 
D) directly proportional to time elapsed since a wage change.

Question 4

Why is the labor market called a matching market?

Accepted Answer

A labor market is a matching market, whe

Question 5

A competitive firm produces notebooks which sell in the market at $2 each.The firm hires 40 workers.If the market price of the notebooks increases to $3.5 each, which of the following statements is true?

Accepted Answer

A) The firm's labor demand curve will become flatter. 
B) The firm's labor demand curve will shift outward parallel to itself. 
C) The firm's labor demand curve will shift outward parallel to itself 
D) The firm's labor demand curve will become steeper. 
A) The firm's labor demand curve will become flatter. 
B) The firm's labor demand curve will shift outward parallel to itself. 
C) The firm's labor demand curve will shift outward parallel to itself 
D) The firm's labor demand curve will become steeper.

Question 6

In long-term job attachments, a worker's wage:

Accepted Answer

A) always exceeds his productivity. 
B) always falls below his productivity. 
C) is lower than his productivity at the beginning, then equals it, and then exceeds the same. 
D) is higher than his productivity at the beginning, then equals it, and then falls below the same. 
A) always exceeds his productivity. 
B) always falls below his productivity. 
C) is lower than his productivity at the beginning, then equals it, and then exceeds the same. 
D) is higher than his productivity at the beginning, then equals it, and then falls below the same.

Question 7

Piece rates are used when:

Accepted Answer

A) an individual's output is independent of others and can be easily measured. 
B) the job involves team production. 
C) an individual's output can be affected by random events. 
D) monitoring is difficult. 
A) an individual's output is independent of others and can be easily measured. 
B) the job involves team production. 
C) an individual's output can be affected by random events. 
D) monitoring is difficult.

Question 8

Explain how compensation plans like piece rate payment, capitation fees, and hourly payment options resolve the principal/agent problem faced by employers.

Accepted Answer

In a principal agent relationship, the p

Question 9

A written contract between an employer and an employee creates value as long as:

Accepted Answer

A) the benefits exceed the costs of forming and enforcing it. 
B) the productivity of the employee is equivalent to the wage. 
C) on-the-job learning is unimportant. 
D) the relationship between the employer and the employee is short-term. 
A) the benefits exceed the costs of forming and enforcing it. 
B) the productivity of the employee is equivalent to the wage. 
C) on-the-job learning is unimportant. 
D) the relationship between the employer and the employee is short-term.

Question 10

Which of the following statements is true about efficiency wages?

Accepted Answer

A) Efficiency wages reduce monitoring cost of the employer. 
B) Employees benefit more from efficiency wages than employers. 
C) Productivity of the employee is usually unaffected by efficiency wages. 
D) Loafing is more rewarding for employees who earn efficiency wages. 
A) Efficiency wages reduce monitoring cost of the employer. 
B) Employees benefit more from efficiency wages than employers. 
C) Productivity of the employee is usually unaffected by efficiency wages. 
D) Loafing is more rewarding for employees who earn efficiency wages.

Question 11

As efficiency wage is higher than the market wage, it must reduce the disutility of effort for a worker.

Accepted Answer

A) True 
 B)False

Question 12

Assume that a firm is operating in the short run and all resources are fixed except for labor.The total product curve for this firm will increase at a decreasing rate because:

Accepted Answer

A) value of marginal product of labor is unchanged as more labor is hired. 
B) marginal product of labor will decline as more labor is hired. 
C) value of marginal product of labor will increase as more labor is hired. 
D) marginal product of labor is unchanged as more labor is hired. 
A) value of marginal product of labor is unchanged as more labor is hired. 
B) marginal product of labor will decline as more labor is hired. 
C) value of marginal product of labor will increase as more labor is hired. 
D) marginal product of labor is unchanged as more labor is hired.

Question 13

Identify the correct statement from the following.

Accepted Answer

A) Wages offered for a particular type of job are the same across the country. 
B) The labor market exhibits rapid adjustment to changes in supply or demand conditions. 
C) The labor market usually yields a range of wages rather than a unique equilibrium. 
D) Wages exhibit frequent and prompt changes in response to changes in market conditions. 
A) Wages offered for a particular type of job are the same across the country. 
B) The labor market exhibits rapid adjustment to changes in supply or demand conditions. 
C) The labor market usually yields a range of wages rather than a unique equilibrium. 
D) Wages exhibit frequent and prompt changes in response to changes in market conditions.

Question 14

Which of the following will have a downward impact on efficiency wages?

Accepted Answer

A) Low monitoring costs 
B) Excess supply in the labor market 
C) High equilibrium wage rate 
D) Excess demand in the labor market 
A) Low monitoring costs 
B) Excess supply in the labor market 
C) High equilibrium wage rate 
D) Excess demand in the labor market

Question 15

Over the long run, migration by workers to higher-wage regions:

Accepted Answer

A) allows wages to equalize across regions. 
B) explains why wage differentials may persist. 
C) causes disequilibrium in the labor market. 
D) increases wages further in those regions. 
A) allows wages to equalize across regions. 
B) explains why wage differentials may persist. 
C) causes disequilibrium in the labor market. 
D) increases wages further in those regions.

Question 16

Explain why funds available to pay the fixed inputs are equal to the area of the triangle below the value of marginal product of labor (VMP) and above the wage.

Accepted Answer

The intersection of the VMP and the wage

Question 17

In an enforceable contract one or both parties could invest too little in relationship-specific assets that increase the economic value their joint efforts can create.

Accepted Answer

A) True 
 B)False

Question 18

Susan works 60 hours a week while Rachel works 20 hours because she is unable to find full-time work.Which of the following statements is true?

Accepted Answer

A) Susan is likely to work for an extra hour without a pay hike. 
B) Rachel is unlikely to give up another hour's leisure without a pay hike. 
C) Susan's opportunity cost of leisure is likely to be lower than Rachel's. 
D) Susan is unlikely to give up another hour's leisure without a pay hike. 
A) Susan is likely to work for an extra hour without a pay hike. 
B) Rachel is unlikely to give up another hour's leisure without a pay hike. 
C) Susan's opportunity cost of leisure is likely to be lower than Rachel's. 
D) Susan is unlikely to give up another hour's leisure without a pay hike.

Question 19

Which of the following methods could be used by an employer to align the incentives of an employee with its own interests?

Accepted Answer

A) Paying market wages 
B) Paying efficiency wages 
C) Signaling 
D) Partially outsourcing human resource functions 
A) Paying market wages 
B) Paying efficiency wages 
C) Signaling 
D) Partially outsourcing human resource functions

Question 20

A firm that fills its vacancies in the upper levels of the hierarchy with its own employees:

Accepted Answer

A) avoids opportunistic behavior by employees. 
B) uses an internal labor market. 
C) avoids the difficult tasks of measuring and comparing the productivities of individual workers. 
D) pays them according to their performance rather than seniority. 
A) avoids opportunistic behavior by employees. 
B) uses an internal labor market. 
C) avoids the difficult tasks of measuring and comparing the productivities of individual workers. 
D) pays them according to their performance rather than seniority.

Michael gets his first job after graduation with a weekly pay of $80.This implies that his productivity is less than $80.

What are typical components of executive compensation and how do they resolve principal/agent problems between shareholders and executives?

In competitive markets, the elasticity of labor supply is:

Why is the labor market called a matching market?

A competitive firm produces notebooks which sell in the market at $2 each.The firm hires 40 workers.If the market price of the notebooks increases to $3.5 each, which of the following statements is true?

In long-term job attachments, a worker's wage:

Piece rates are used when:

Explain how compensation plans like piece rate payment, capitation fees, and hourly payment options resolve the principal/agent problem faced by employers.

A written contract between an employer and an employee creates value as long as:

Which of the following statements is true about efficiency wages?

As efficiency wage is higher than the market wage, it must reduce the disutility of effort for a worker.

Assume that a firm is operating in the short run and all resources are fixed except for labor.The total product curve for this firm will increase at a decreasing rate because:

Identify the correct statement from the following.

Which of the following will have a downward impact on efficiency wages?

Over the long run, migration by workers to higher-wage regions:

Explain why funds available to pay the fixed inputs are equal to the area of the triangle below the value of marginal product of labor (VMP) and above the wage.

In an enforceable contract one or both parties could invest too little in relationship-specific assets that increase the economic value their joint efforts can create.

Susan works 60 hours a week while Rachel works 20 hours because she is unable to find full-time work.Which of the following statements is true?

Which of the following methods could be used by an employer to align the incentives of an employee with its own interests?

A firm that fills its vacancies in the upper levels of the hierarchy with its own employees:

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

Exam 15: Employment Relationships

Michael gets his first job after graduation with a weekly pay of $80.This implies that his productivity is less than $80.

What are typical components of executive compensation and how do they resolve principal/agent problems between shareholders and executives?

In competitive markets, the elasticity of labor supply is:

Why is the labor market called a matching market?

A competitive firm produces notebooks which sell in the market at $2 each.The firm hires 40 workers.If the market price of the notebooks increases to $3.5 each, which of the following statements is true?

In long-term job attachments, a worker's wage:

Piece rates are used when:

Explain how compensation plans like piece rate payment, capitation fees, and hourly payment options resolve the principal/agent problem faced by employers.

A written contract between an employer and an employee creates value as long as:

Which of the following statements is true about efficiency wages?

As efficiency wage is higher than the market wage, it must reduce the disutility of effort for a worker.

Assume that a firm is operating in the short run and all resources are fixed except for labor.The total product curve for this firm will increase at a decreasing rate because:

Identify the correct statement from the following.

Which of the following will have a downward impact on efficiency wages?

Over the long run, migration by workers to higher-wage regions:

Explain why funds available to pay the fixed inputs are equal to the area of the triangle below the value of marginal product of labor (VMP) and above the wage.

In an enforceable contract one or both parties could invest too little in relationship-specific assets that increase the economic value their joint efforts can create.

Susan works 60 hours a week while Rachel works 20 hours because she is unable to find full-time work.Which of the following statements is true?

Which of the following methods could be used by an employer to align the incentives of an employee with its own interests?

A firm that fills its vacancies in the upper levels of the hierarchy with its own employees:

Reasoning With Economics: Models and Information

Transactions and Institutions: the Building Blocks

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters