labor Chap011 - TEST BANK Robert J. Lemke Lake Forest...

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TEST BANK Robert J. Lemke Lake Forest College Fall 2008 Labor Economics 5 th Edition George Borjas Chapter Eleven 1. A firm that finds it extremely expensive to monitor the output of each worker will likely pay its workers A. with piece rates. B. with time rates. C. with incentive pay. D. according to how much each worker produces. E. on commission. Ans: B 2. Which of the following is not a true statement regarding the incentives of different pay structures impose on workers? A. Piece rates an option when individual output is easily measured by firms. B. Tournaments can elicit more effort than a time rate. C. Worker effort can be a function of the pay structure. D. Worker productivity is unrelated to the pay structure. E. Profit sharing is a pay structure designed to elicit more effort from workers, but it can suffer from the free-riding problem. Ans. D 3. Which of the following might help a firm motivate its workers to put forth more effort? A. Providing a free or subsidized company gym and/or cafeteria. B. Installing monitoring equipment. C. Providing competitive year-end bonuses. D. Both (A) and (C) might help a firm motivate its workers to put forth more effort. E. All of (A), (B), and (C) might help a firm motivate its workers to put forth more effort. Ans: E 4. Piece rates would work best for which of the following occupations? A. Workers on a factory assembly line. B. Firemen. C. Body guards. D. Taxicab drivers. E. Senators. Ans: D 5. _______ are most closely associated with creating a pool of workers who are involuntarily unemployed. A. Piece rates B. Incentive pay schemes 1
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C. Time rates D. Efficiency wages E. Profit sharing schemes Ans: D 6. Under a piece rate pay scheme where all workers face different upward-sloped marginal cost curves for providing effort: A. All workers will provide the same amount of effort. B. All workers will produce the same amount of output. C. All workers will be paid the same amount. D. Workers with higher marginal cost curves will produce more output than workers with lower marginal cost curves. E. Workers with higher marginal cost curves will produce less output than workers with lower marginal cost curves. Ans: E 7. Which of the following is typically not a possible disadvantage of a tournament? A. Competitors have little incentive to help one another (and they may even sabotage each other’s work). B. Workers rarely understand all of the rules to a tournament. C. A large prize spread can encourage workers to provide effort until the very end of the tournament, even if the worker has a small chance of winning. D. Workers may collude to share the prize in order to provide lower levels of effort. E. The outcome of a tournament may appear to be random. Ans:
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This note was uploaded on 12/09/2010 for the course ECONOMICS 304 taught by Professor Schwenkenberg during the Spring '10 term at Rutgers.

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labor Chap011 - TEST BANK Robert J. Lemke Lake Forest...

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