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What Prevents a Firm from Offering a Delayed-Compensation Scheme to Its

Question 2

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What prevents a firm from offering a delayed-compensation scheme to its employees and then firing each worker when the worker's value of marginal product equals his or her wage?


A) Firms that offer delayed-compensation schemes are legally barred from firing workers.
B) Profits would increase by allowing the worker to continue work at a lower wage.
C) The worker will have already retired by the time the worker's value of marginal product equals his or her wage.
D) The firm would lose the trust of the workers, and new workers would not accept the payment scheme.
E) Profits are insensitive to when the worker quits his job.

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