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54.(p. 209)In practice, organizations use skills and competencies to assess value of labor instead of marginal revenue product. Difficulty: Medium55.(p. 210)Compensating differentials theory says that paying above market wages will lead to workers with higher ability. Difficulty: Medium56.(p. 210)According to efficiency-wage theory, paying higher wages than competitors lowers labor costs due to more efficient workers. Difficulty: Easy7-30
Chapter 07 - Defining Competitiveness57.(p. 211)Signaling theory argues that higher wages leads to greater efficiency. Difficulty: Medium58.(p. 211)An employer offering lower base pay with high bonuses is likely signaling they are seeking risk-taking employees. Difficulty: Easy59.(p. 212)Signaling theory applies to both the demand and supply side. Difficulty: Easy60.(p. 212)Job applicants who will not accept a job that pays below a certain level are acting according to signaling theory. Difficulty: Medium61.(p. 213)It is likely that workers act in accordance with reservation wage theory with respect to both wages and benefits. Difficulty: Easy7-31
Chapter 07 - Defining Competitiveness62.(p. 213)The most influential theory explaining pay-level differences is marginal revenue productivity. Difficulty: Medium63.(p. 213)Human capital theory assumes that people are paid at the value of their marginal product. Difficulty: Medium64.(p. 214)The product market sets the floor on the minimum wage required to attract sufficient numbers of employees. Difficulty: Easy65.(p. 214)Employers in highly competitive markets are less able to raise prices without loss of revenues. Difficulty: Easy66.(p. 216)Wages in labor-intensive industries are generally lower than in technology intensive industries. Difficulty: Medium7-32
Chapter 07 - Defining Competitiveness67.(p. 217)Talented individuals have a higher marginal value in larger organizations. Difficulty: Easy68.(p. 218)The three factors usually used to determine the relevant labor markets are the occupation, geography, and competitors. Difficulty: Easy69.(p. 222)Combat pay premiums paid to military personnel offset some of the risk of being fired upon is an example of a lead pay-level policy. Difficulty: Easy70.(p. 223)A lead policy may force the employer to increase wages of current employees too, to avoid internal misalignment and murmuring. Difficulty: MediumShort Answer Questions