Chapter 7

Question 1

Labor cost =
A) average pay level
B) array of pay rates
C) (total pay) divided by (number of employees)
D) (pay level) times (number of employees)
(p. 237

Answer 1

D) (pay level) times (number of employees)

Question 2

The concept underlying marginal product is _________
A) productivity increases with additional labor
B) wage rates determine number new hires
C) constant factors of production lead to diminished productivity with additional hires
D) the intersection of supply and demand curves dictate productivity

Answer 2

C) constant factors of production lead to diminished productivity with additional hires

Question 3

Companies often set different pay level policies for different job families.
A) TRUE
B) FALSE

Answer 3

A) TRUE

Question 4

A study of graduating college students found they were looking for all but which of the following? 
  A) high pay 
  B) team-based pay 
  C) flexible benefits 
  D) job-based pay

Answer 4

B) team-based pay

Question 5

Which of the following theories is most similar to establishing a brand for a product or service? 
  A) human capital 
  B) signaling 
  C) marginal productivity 
  D) efficiency wage

Answer 5

B) signaling

Question 6

If an employer wanted reduce turnover, use fewer supervisors and have less "screwing around" by employees, following which wage theory would be most likely to achieve these goals? 
  A) efficiency wage 
  B) signaling 
  C) reservation wage 
  D) human capital

Answer 6

A) efficiency wage

Question 7

If you were seeking a job, which of the following is most likely to offer the highest pay?
A) a large health care company
B) a large (over 500 employees) petroleum company
C) a small (under 100) clothing retailer
D) a small manufacturer

Answer 7

B) a large (over 500 employees) petroleum company

Question 8

When the supply of labor is not responsive to changes in pay, product market competitor data are likely to be weighted more than labor market competitor data.
A) TRUE
B) FALSE

Answer 8

A) TRUE

Question 9

Which of the following pay policies are most likely to attract, retain and contain labor costs? 
  A) lead 
  B) match 
  C) hybrid 
  D) employer of choice

Answer 9

D) employer of choice

Question 10

In which of the following pay-mixes are bonuses and options the smallest? 
  A) performance driven 
  B) market match 
  C) security or commitment 
  D) work-life balance

Answer 10

C) security or commitment

Question 11

What 4 basic assumptions do theories of labor markets usually begin with?

Answer 11

1. employers always seek to maximize profits
2. People are homogeneous and therefore interchangeable
3. the pay rates reflect all costs associated with employment
4. The markets faced by employers are competitive, so there is no advantage for a single employer to pay above or below the market rate