Compensation Administration - Chapter 7

Wages tend to be the lowest in which of the following industries? A) Education and health care B) Technology-intensive industries C) Professional services D) Pharmaceuticals

A) Education and health care

________ theory is based on the premise that higher earnings flow to those who improve their potential productivity by investing in themselves. A) Human capital B) Labor market C) The efficiency-wage D) The compensating differentials

A) Human capital

The pay-level policy that is most likely to reduce pay dissatisfaction is a(n) A) lead policy. B) employer of choice policy. C) lag policy. D) match policy.

A) lead policy

________ focuses attention on the competitive positions reflected in the pay relationships among organizations. A) Labor demand B) External competitiveness C) Utility theory D) Pay satisfaction

B) External competitiveness

Evidence shows that in manufacturing, ________ is positively correlated with hourly wage level. A) turnover B) productivity C) a job description D) total cost

B) productivity

Which of the following statements is true of pay level? A) Pay level is the same across all organizations for the same job. B) The higher the pay level relative to what competitors pay, the lower the relative costs to provide similar products or services. C) Pay level is directly proportional to labor costs. D) Pay level is independent of the number of employees in an organization.

C) Pay level is directly proportional to labor costs.

The estimates of competitors' pay rates will be incorrect and the pay level and pay mix inappropriately established if: A) employees demand for an increase in wages. B) the marginal revenue generated is low. C) markets are incorrectly defined. D) the cost for procuring labor is high.

C) markets are incorrectly defined.

Which of the following is an example of a bourse market? A) Neurofort, a website that sells surgical equipment in bulk at fixed prices B) Hardknox, a hardware store that sells all its products at 10 percent above the maximum retail price C) Needlefarm, a store that sells premium furniture at discounted rates D) Flatcake, a website that allows buyers to negotiate prices with the sellers of handmade goods

D) Flatcake, a website that allows buyers to negotiate prices with the sellers of handmade goods

The pay-mix policy alternative in which the percentage of benefits is likely to be the highest is known as a A) work/life balance policy. B) security policy. C) performance-driven policy. D) market match policy.

A) work/life balance policy.

________ is the additional output associated with the employment of one additional human resource unit, with other production factors held constant. A) Productivity B) The marginal product of labor C) Incremental productivity D) The marginal revenue of labor

B) The marginal product of labor

In which of the following conditions would product market competitors' data be given more weight than data from labor market competitors? A) Labor costs are a small share of total costs. B) Employee skills are generic across all product markets. C) Product demand is responsive to price changes. D) The supply of labor is not responsive to changes in pay.

C) Product demand is responsive to price changes.

Which of the following is an example of a quoted-price market? A) Streetcash, a website that allows buyers to negotiate product prices with sellers B) Vidwom, a website that allows buyers to bid for items sold by other users C) Gramspot, a website where cars are auctioned by sellers for charity D) Nile, a website that allows sellers to sell their products for a fixed price

D) Nile, a website that allows sellers to sell their products for a fixed price

________ refers to the average of the array of rates paid by an employer. A) Revenue margin B) Remuneration C) Compensation D) Pay level

D) Pay level

All of the following are advantages of a lead pay-level policy EXCEPT A) reduced vacancy rates. B) higher turnover rates. C) reduced absenteeism. D) better-quality employees.

B) higher turnover rates.

Which of the following is NOT true of the relationship between employer size and its ability to pay? A) Talented individuals have a lower marginal value in a larger organization. B) Talented people can influence more people and decisions. C) The influence of talented people leads to more profits. D) Talented people prefer to work in larger organizations.

A) Talented individuals have a lower marginal value in a larger organization.

If Company A raises its pay rate by one dollar per hour to hire additional workers and competitors immediately match the increase, what will be the most likely result? A) The labor costs for Company A will increase, but it will be unable to hire additional workers. B) Company A will hire the needed workers at a higher wage rate. C) Competitors of Company A will lose employees to Company A. D) Company A will hire higher quality workers.

A) The labor costs for Company A will increase, but it will be unable to hire additional workers.

Druk, Inc. is a consulting firm with 10 employees. Each new client generates $10,000 in revenue. If the company hires another employee who brings in five new clients and all other factors of production are constant, which of the following statements is true? A) Druk will break even if it hires a 12th employee for a wage of $50,000. B) Druk needs to pay $10,000 as wage to the 11th employee to break even. C) Druk will break even if it hires a 13th employee for a wage of $10,000. D) Druk needs to pay $50,000 as wage to the 11th employee to break even.

B) Druk needs to pay $10,000 as wage to the 11th employee to break even.

________ puts a lid on the maximum pay level an employer can set. A) Government legislation B) The product market C) The labor market D) Labor market competition

B) The product market

________ 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

B) The total compensation for a top athlete

Among pay-mix alternatives, the percentage of base pay is highest in a A) work/life balance policy. B) security or commitment policy. C) performance-driven policy. D) market match policy.

B) security or commitment policy.